Beruflich Dokumente
Kultur Dokumente
Customs Journal
March 2012
Volume 6, Number 1
Volume 6, Number 1
Contents
Editorial................................................................................................................................................. v
SECTION 1 ACADEMIC CONTRIBUTIONS
Excise taxation of key commodities across South East Asia: a comparative analysis
ahead of the ASEAN Economic Community in 2015
Rob Preece........................................................................................................................................ 3
Coordinated border management: the experience of Asia and the Pacific region
Shingo Matsuda............................................................................................................................... 79
Ewa Gwardziska............................................................................................................................ 93
Volume 6, Number 1
iii
iv
Volume 6, Number 1
Editorial
At first glance, this edition of the World Customs Journal comprises what appears
to be a disparate array of topics. However, I invite your attention to the underlying
theme of contrasting approaches to universal imperatives which permeates several
of the contributions. Rob Preece, for example, introduces his comparative analysis of
excise taxation across the ASEAN region and identifies the need for standardisation
in readiness for the impending introduction of the ASEAN Economic Community.
Stephen Holloway and Jeffrey Rae present the results of their research into the
diversity of de minimis arrangements in the APEC region, highlighting their impact
on economic benefits and costs. Sandeep Raj Jain examines a variety of regional
approaches to coordinated border management, and Ewa Gwardziska examines the introduction of the
EUs electronic customs environment as a means of achieving regional standardisation.
The underlying commonality of border management imperatives is also reflected in this editions Special
Report. In his insightful article Lines and Flows: the Beginning and End of Borders Alan Bersin
challenges the traditional concept of international borders, and introduces a paradigm that views global
cooperation as a fundamental requirement for effective border management. The Editorial Board would
like to thank Mr Bersin for his valuable contribution.
In response to the requests of many of our readers, the next edition of the Journal will focus on excise
policy and practice, and will include papers presented at the World Customs Organizations Global
Excise Summit which will be held on 2-3 July at the WCO Headquarters in Brussels. Another important
date for your diaries is this years PICARD conference that will be held in Marrakech, Morocco in the
last week of September. I look forward to seeing you there!
David Widdowson
Editor-in-Chief
Volume 6, Number 1
vi
Volume 6, Number 1
Section 1
Academic
Contributions
Volume 6, Number 1
Abstract
As the Association of Southeast Asian Nations (ASEAN) moves towards the formation
of its Economic Community (AEC) in 2015, it is worth considering the extent, if any,
of any major differences in the excise taxation systems across the ASEAN membership.
The issues which could arise will ultimately be determined by the actual final shape of
the AEC on its commencement, and the extent to which the single market objectives
of the AEC will allow for the free movement of goods and investment. Without
harmonisation or indeed any form of standardisation or at least coordination of excise
and like taxes, there could well be issues for ASEAN members to manage in the
areas of local production and distribution moving across borders; import and regional
distribution arrangements being reviewed; and cross-border shopping or trade in
non-commercial volumes of excise duty paid goods. Each of these issues potentially
requires a regional level policy discussion, as well as local policy consideration, but
most importantly, the need to look at various administrative arrangements to monitor
the movement of excisable goods across ASEAN. This paper looks at various analytical
approaches to comparing the differences across the ASEAN excise tax systems.
In 2003, the leaders of the various states of the Association of Southeast Asian Nations (ASEAN)1 agreed
to the formation of an Economic Community (AEC) as part of its larger ASEAN Vision 2020 plan.2 A
road map for implementation was then laid out in 2007 in a document titled the ASEAN Economic
Community Blueprint in which the following characteristics of the new regional economic integration
were outlined as being:3
As this paper is focused on the area of excise taxation, of interest in this study is the first of these
characteristics: the formation of a single market and a single production base with the ASEAN region.
Excise is primarily a tax on the production (or import) of certain goods, although it can also be found
being applied to some services.
Significantly, excise taxes represent different priorities for different countries in terms of being a source
of revenue, and increasingly, excise taxes are now often being set by governments to meet certain policy
objectives around the consumption of those goods, for example, tobacco excises may be utilised so
that retail pricing meets a certain level and reduces demand, or fuel excises may have exemptions on
alternative clean burning fuels to stimulate demand for those fuels over fossil fuels.
Volume 6, Number 1
Volume 6, Number 1
in the case of Thailand,10 a mixed rate ad valorem and specific excise rate tariff in which the tax
payer calculates against both rates and pays the higher of the two.
Approaches to the tax base, or basis of excise tax calculation differed across the members excise tax
systems. Here the study found that in:
- Ad valorem excise systems, taxable value was ex-factory selling price (or CIF + import duties
for like imported goods) being the most common; in Thailand, it is an excise and local tax
inclusive ex-factory selling price (or CIF + customs duty + excise duty + local tax for like
imported goods); in Cambodia, it is 65% of the customers invoice price; and in Myanmar, it is
sales receipt value.
-
Specific rate excise systems, taxable volume was either per litre (for liquid fuels, alcoholic
beverages, non-alcohol beverages); per litre of alcohol (for alcoholic beverages); per stick for
cigarettes; or per kilogram for cigarettes and tobacco.
Some definitions of tobacco contain reference to either per stick, or per pack, in the case to
cigarettes.
Some classifications for excise items are linked to retail pricing (in the Philippines, for alcohol)
and then for tobacco, there are also classifications which are in terms of per stick (Indonesia) or
per pack (Philippines) for tobacco products.
A lack of transparency in effective excise rates particularly in the taxation of fuels with a range of
both subsidies in place, and the use of temporarily cut excise rates and rate discounts for goods
meeting certain criteria.
In order to overcome some of these issues, the study looked to standardise the various excise systems of
ASEAN. In this process, two approaches were adopted depending upon the nature of the goods. Where
pure ad valorem taxation was utilised across ASEAN, such as motor vehicles, the items under that
commodity were reviewed to establish whether any commonalities or similarities were present on which
6
Volume 6, Number 1
<2000cc
2-3000cc
>3000cc
10-16 seat
>16 seat
Pick-up
20%
20%
45%
65%
80%
25%
15%
20%
30%
45%
40%
20%
45%
75%
90%
25%
50%
20%
40%
50%
75%
20%
45%
90%
105%
25%
100%
20%
50%
60%
10%
20%
10%
20%
20%
105%
20%
20%
105%
20%
20%
20%
20%
30%
15%
20%
3%
15%
A common feature here is the increase in excise rate with increasing engine size, with the exception of
Brunei, Myanmar and Singapore, although none of these countries has a vehicle manufacturing sector.
Five countries have a concessional rate of excise for the pick-up truck, with the other five countries
having the engine size determine the excise rate for all passenger vehicles. There are some quite large rate
differentials across the countries, with Malaysia having the highest rates in all categories, and these rate
differentials stay fairly consistent as engine size increases. Analysis in terms of production costs would
be interesting at some point, as vehicle production requires significant long term investment. With the
AEC providing for free flow of capital and investment, one issue to explore is whether vehicle producers
looking at high excise rate markets like Malaysia, or at certain high excise rate market segments like
large engine vehicles in Indonesia or the Philippines, could look to invest in production in low cost
centres to reduce the taxable value of the vehicle and therefore its competitiveness in those markets or
market segments.
There would also seem to be some attractiveness for cross border shopping or private individuals
purchasing their vehicles in lower taxed neighbouring countries and then driving these vehicles home.
With a free flow of people across borders, it may become increasingly difficult to even identify
potentially excisable vehicles in such border crossing settings.
More difficult to analyse are those excise tariffs relating to alcoholic beverages and tobacco products as
they possess a range of different approaches to the way in which the goods are taxed. Table 2 (alcohol)
required all types of beverage to be bought to a standard litre of pure alcohol rate. For Brunei, Indonesia,
Malaysia and the Philippines, this meant making an assumption that beer is a standard 5% alcohol by
volume (a/v), wine 12.5% a/v and spirits 40% a/v. The specific rates were then further standardised to
Thai Baht equivalent.11
Volume 6, Number 1
Beer Tax
Wine Tax
Spirits Tax
Indonesia
740
1,047 (local)
815 (local)
Brunei
Cambodia
Laos PDR
Malaysia
1,415
25%
50%
1,525 + 15%
1,392 (import)
1,038
10%
60%
987 + 15%
1,415 (import)
1,475
10%
70%
308 +15%
50% (rural)
Myanmar
50%
50%
60% (local)
200% (import)
157 (cheap)
Philippines
12
118 (cheap)
236 (mid price)
473 (premium)
Singapore
1,161
Thailand
100 or 60%
100 or 60%
Viet Nam
45%
25%
1,694
400 (special spirit) or 50%
The study still has a problem with comparative analysis across Table 2, as there remains the issue of
trying to compare tax systems which are ad valorem, specific excise, and in the case of Malaysia, mixed
rates, or Thailand which has the greater of an ad valorem or a specific rate. To overcome this issue, it
was decided that the study would select three representative products from the Thai alcoholic beverage
market, one each of beer, wine and spirits, and then proceed to classify each of these beverages in each
ASEAN members excise tax system, and calculate the respective excise duty payable in each system
and use this excise payable per representative product as a guide only as to the extent of excise rate
differentials across the region.
The three representative products mentioned in Table 3 had information on their labels to identify the
volume and alcohol strength or the product to determine the litres of pure alcohol (lals) and used details
of the taxable ex-factory value from the Excise Departments authoritative assessment list.13
Table 3: Representative alcoholic beverages
Beer
Chang 330ml
5% a/v
0.0165 lals
Ex-factory THB 19.13
Wine
Monsoon 750ml
12.5% a/v
0.09375 lals
Ex-factory THB 165
Spirits
Songsam Rum 700ml
40% a/v
0.28 lals
Ex-factory THB 180
Volume 6, Number 1
Rum 700ml
THB per bottle
23.39
4.86
9.72
27.95
98.1 (local)
130.63 (import)
97.51
167
99
117.57
Myanmar
9.72
83.54
Philippines
Singapore
Thailand
Viet Nam
2.49
19.15
11.47
8.51
12.46
158.58
99
41.92
228.1 (local)
396.5 (import)
413.17
18.23
106.33
113.62
91.1 (rural)
109.3 (local)
334.1 (import)
132.76
473.32
112
82
Country
Indonesia
12.21
Brunei
Cambodia
Laos PDR
Malaysia
There are several areas of interest in the comparative analysis. The beer excise payable in the highest
taxing country, Malaysia, is some 11 times higher than that of the lowest taxing country, the Philippines.
A similar differential exists between Singapore and the Philippines in wine excise payable, but for spirits
excise the tax payable in Singapore, as the highest excise rate, is some 26 times higher than it is for
Cambodia, the lowest tax rate. These are fairly significant rate differentials and it would not be surprising
if these differentials are already contributing to cross border movement of excisable goods, including in
many cases in an illicit manner, to avoid excise payment in countries of consumption.
Another area of interest is the use of excise as a non-tariff barrier by Indonesia and Myanmar where both
have prescribed rates of excise higher for imports than for the like domestically produced product. The
Philippines may also have an issue with transparency in non-tariff barrier use, given that classification
is based partly on net retail price and given the nature of imported product and those costs involved in
moving the goods to the Philippines, imports will generally pick up the higher retail values and therefore
higher excise rates. Non-tariff barrier removal is a key aspect of the AEC blueprint and undertakings to
remove these are contained in paragraph 14 as was discussed above.
It will be interesting to note whether similar rate differential and non-tariff barrier issues are also present
in tobacco, another traditional product subject of smuggling and protection of local industry.
Table 5 looks at packaged tobacco products which include cigarettes and kreteks, and again the study
has issues similar to those with alcohol in terms of the different approaches to excise taxation by the
different ASEAN states.
Volume 6, Number 1
Cigarettes
Kretek/handmade
1,525
Indonesia
(factory makes >2bn sticks)
Brunei
Cambodia
Laos PDR
Malaysia
Myanmar
Philippines
15.84 (4.2-0.6.6/pack)
3.59 (handmade)
37.36 (>6.6/pack)
8619
85%
65%
Singapore
Thailand
Viet Nam
Source: Preece 2012.
With the range of differing structures of tobacco taxes and the different approaches to taxing tobacco
across ASEAN, it was again decided to utilise a representative product to classify and calculate excise
for each country. The representative product is Thailands largest selling brand Krong Thip 9014 where
details of the product, including contents and cost builds as at 2010 were taken from the World Health
Organization (WHO).15 Details of the product are in Table 6 below.
Table 6: Representative tobacco products
Retail Price:
THB 58
Pack size:
Excise:
Ex-factory:
THB 30.4
Using the representative product, classification based on ex-factory, retail price or weight as appropriate,
Table 7 is the results of the exercise expressed as excise per pack in Thai Baht for each ASEAN country.
10
Volume 6, Number 1
Indonesia
Brunei
Cambodia
Laos PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Viet Nam
Source: Preece 2012.
Again it is seen that considerable rate differentials exist with the excise payable in Singapore (the highest
excise rate) some 57 times that of the excise payable in Cambodia (the lowest excise rate) for this
representative product. Such differentials could again facilitate the possibility of smuggling, including
the cross border movement of duty paid products from low excise countries into higher taxed neighbours.
Laos PDR also has a substantial trade barrier in the form of an excise rate which is fixed for imports and
in the case of this representative product, that rate will be effectively seven times greater than for a like
domestic product.
Finally, the study looked at a range of other goods and services but limited this to those commodities
which are subject to excise in at least four ASEAN countries. These goods and services are outlined in
Table 8 below and where applicable, have been standardised to Thai Baht equivalent rates per litre.
Table 8: Excise rates on selected goods and services in ASEAN
Country
Gasoline
Indonesia
Brunei
Cambodia
Diesel
Fuel Ethanol
4.35%
Laos PDR
20%
10%
Malaysia*
Myanmar
Philippines
Singapore
5.92
170%
1.74
8.4**
1.99
90%
0.65
8.4**
Non-alcohol
beverages
Karaoke/
Nightclub
10%
5%
10%
10% (imports)
10%
20%
2.01
Thailand
7.00
0.05***
Ex
Viet Nam
10%
10%
10%
10%
30%
10%
30%
*
Specific rate sales tax
** Assume regular unleaded
*** Temporary rate, usually 5.31 THB/litre
Source: Preece 2012.
Volume 6, Number 1
11
Volume 6, Number 1
IT-based approaches, perhaps the use of connected National (and eventually) ASEAN Single
Window
13
Conclusions
In conclusion, as ASEAN moves towards its version of a single market by 2015, significant differences
that exist in the excise systems could well see changes in investment in production and distribution
arrangements in the major excise goods categories of motor vehicles, tobacco products and alcoholic
beverages. An analysis of the 10 ASEAN excise tax systems suggests that certain excise rate differentials
will create this incentive to move production and distribution arrangements. This will allow producers
to lower production costs and reduce taxable values in the country of intended consumption. As a result,
there will likely be an increase in the movement of excisable goods across ASEAN and risks will be
associated with this. Therefore, this study believes that ASEAN should look at a number of areas to
reduce this risk:
standardise and/or harmonise some aspects of excise taxation policy to remove some of this potential
movement of production and distribution, for example, guide-lines for member states that perhaps
introduce specific rates of excise to remove the incentive to reduce excisable values, and/or set
minimum rates of excise on certain goods
regional coordination of the intra-regional movement of excisable goods by creating a regional
excise transit system which is supported by technology such as track & trace, RFID or GPS-based
solutions
standardise definitions and structures of excise taxation systems again through ASEAN-issued
guidelines to improve transparency and ease of business and administration in the intra-regional
trade of excise goods.
References
ASEAN 2007, ASEAN Economic Community Blueprint, ASEAN Secretariat, Jakarta.
ASEAN 2008, ASEAN Trade in Goods Agreement, ASEAN Secretariat, Jakarta.
ASEAN 2011, ASEAN Economic Community Guide for Business, ASEAN Secretariat, Jakarta.
Commercial Tax Law 1991, as amended, Myanmar.
Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the implementation
of Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code.
Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes.
Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on
alcohol and alcoholic beverages.
Council Directive 2003/96/EC of 27 October 2003 on restructuring the Community Framework for the
taxation of energy products and electricity.
Excise Duties Order 2004, as amended, Malaysia.
Excise Duties Order 2007, Brunei Darussalam.
Excise Tax Act (BE 2527), Thailand.
Holden M 2003, Stages of economic integration: from autarky to economic union, viewed 29 March
2012, http://publications.gc.ca/Collection-R/LoPBdP/inbrief/prb0249-e.htm.
Law on Excise Tax 2010, Socialist Republic of Vietnam.
Liquor Act (BE 2493), Thailand.
National Internal Revenue Code 1991, as amended, The Philippines.
Organisation for Economic Co-operation and Development (OECD) 2004, Classification of taxes and
interpretative guide, OECD, Paris.
14
Volume 6, Number 1
Notes
1 ASEAN membership includes Brunei Darussalam, Cambodia, Indonesia, Laos PDR, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam.
2 Paragraph 1, Declaration of ASEAN Concord II (Bali Concord II) 2003, viewed 29 March 2012, www.aseansec.org/15159.
htm.
3 Paragraph 8, ASEAN Economic Community Blueprint 2007.
4 OECD 2004, Classification of taxes and interpretative guide, paragraph 61, classification sub-heading 5121.
5 OECD 2004, Classification of taxes and interpretative guide, paragraphs 53-58, classification heading 5100, sub-headings
5110-5113.
6 See, for example, Indonesias reform of alcohol and tobacco items in the Luxury Sales Tax to be Excise Tariffs, Vietnam to
use the term excise in reforms of alcohol and tobacco items of the Special Consumption Tax, and Thailands proposal to bring
provisions of the Liquor Act and Tobacco Act into the general Excise Act.
7 Paragraphs 10-19, ASEAN Economic Community Blueprint (2007).
8 ASEAN 6 includes Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, and ASEAN CLMV
includes Cambodia, Laos PDR, Myanmar, and Vietnam.
9 Articles 79-90, Section 2, Community Customs Code established under Council Regulation EEC 2913/92, 12 October 1992.
10 In many cases this value is actually set by the Excise Department itself in a system known as authoritative assessment.
11 Currency conversions at 12 February 2012 via XE Currency conversion.
12 Philippines uses Net Retail Price per litre for classification. In table 2, Beer cheap = less than 14.50 peso, mid price = 14.50
to 22 peso, and premium = greater than 22 peso. Wine cheap sparkling = less than 500 peso and premium = greater than 500
peso. Spirits (except made with local raw materials: cheap = less than 250 peso, mid price = 250 to 675 person, and premium
= greater than 675 peso.
13 As per latest 19/12/2552 BE (2009).
14 Manufactured by the Thai Tobacco Monopoly (TTM).
15 World Health Organization (WHO) 2011.
16 Telecommunications is subject to excise in Thailand, and gaming is subject to excise in Thailand and Vietnam.
17 Paragraphs 20-22, AEC Blueprint.
18 EU 92/883 EEC approximation of excise duties on alcohol.
19 EU 92/79 EEC approximation of tobacco excise.
20 EU 2003/96 EU restructuring Community framework on energy and electricity.
Volume 6, Number 1
15
Rob Preece
Adjunct Associate Professor Rob Preece is an Associate Director with the Centre for
Customs and Excise Studies (CCES), University of Canberra, and is currently based
in Bangkok, Thailand. Rob is the Convener of CCESs Post Graduate Diploma in
Excise Studies program and undertakes various research and training programs in
the area of customs and excise taxation. He undertakes capacity building, vocational
training, policy development, and research, including development of economic
modelling on behalf of governments, the private sector and academic partners. Rob
holds a Masters degree in International Customs Law & Administration, and has 27
years experience in the areas of excise and customs law, including 15 years with the
Australian Customs Service.
16
Volume 6, Number 1
Abstract
This paper aims to identify formal and informal institutional factors in customs
procedures and their impact on the performance of small and medium-sized enterprises
(SMEs) involved in international trade in Kosovo based on a questionnaire carried
out in 2009. The econometric findings show that one of the most important obstacles
encountered by SMEs are regular appeals against customs decisions, particularly those
which reflect frequent changes in over-complicated laws and regulations. However,
there is a positive and significant effect of the formal customs instruments that facilitate
the trade in imported goods, namely customs procedures with economic impact.
1. Introduction
The government institutions in transition countries are still regarded as ill-performing, fragile and weak
in terms of the design and implementation of state policies. This has affected the economies of these
countries, which suffer from a lack of general continuity in the economic sector; in particular, these
obstacles are more pronounced for small and medium-sized enterprises (SMEs) (Hashi 2001). One of
the biggest barriers for enterprises in transition countries is the low level of institutional development in
relation to business regulation, as well as the business tax system (Aidis & Sauka 2005). The multitude
of institutional policies affects the regular functioning of businesses and often plays a destructive role
in the growth and performance of SMEs. Another example of the destructive role of state institutions
in transition countries is the considerable number of unnecessary laws and regulations which regulate
entrepreneurial activities and business operations. Such regulatory overload causes an increase in
corruption and nepotism (Bartlett & Bukvi 2001; Smallbone & Welter 2001a; Djankov et al. 2002).
The role of SMEs in a countrys economic, political, social and technical development continues to be the
focus of an intensive debate between academics and policymakers. Generally, the scholars investigating
SMEs consider these enterprises to be a key factor in economic growth, raising employment, supporting
the formation of competitive markets, technical innovation and other aspects of socioeconomic
development (Acs & Audretsch 1990; Storey 1994; Johnson & Loveman 1995). The importance of the
role played by SMEs derives from the fact that the vast majority of enterprises are SMEs. Therefore,
SMEs are considered to be generators of economic growth (Storey 1994; McMillan & Woodruff 2002;
Audretsch 2007).
SME growth is also of great importance for countries in transition because of the radical changes that
have occurred in command economies which discriminated against private companies whilst providing
institutional and commercial support to public ones. The creation of a supportive environment which
encourages the development of SMEs and bold entrepreneurship is one of the biggest challenges for
transition countries.
Many authors have investigated the various obstacles faced by SMEs, including those that occur in
transition economies (Bartlett & Prasnikar 1995; Blanchard 1997; Bartlett & Bukvi 2001; Hashi,
2001; Smallbone 2002; Pissarides, Singer & Svenjar 2003; Aidis 2005; Estrin, Meyer & Bytchkova
Volume 6, Number 1
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19
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21
22
Volume 6, Number 1
4. Empirical findings
Using the equation above, our calculations provide the following results. Hypotheses 1 and 2 regarding
the higher education of managers and involvement of consultants for customs transactions are valid. Both
coefficients are positive and significant and can be interpreted as follows. An increase in consulting costs
of 1,000 euros increases a firms turnover growth by 1.4%. If a firms manager has tertiary education, the
turnover growth was found to be higher by almost 13%. Our calculations also support hypotheses 3 and
4. We find a negative correlation between the number of employees and number of years that the firm
has been active in terms of turnover growth, with both coefficients being highly significant. These results
do not support Gibrats Law but are in line with the findings of other studies (see Krasniqi 2006, 2007).
From the set of customs-related indicators, only two were significant. These are the use of procedures
with economic impact as well as the appeals variable. While the former coefficient is highly significant,
the latter is only significant at the 10% level. The coefficient for the use of procedures with economic
impact is positive and the coefficient for the appeals variable negative. The coefficients of both dummy
variables are similar in size, indicating that the use of the former relates to higher turnover growth
of approximately 12%, whereas turnover growth is 11% less for firms involved in appeals. All other
customs-related coefficients are insignificant, indicating that the use of simplified procedures, perceived
bad customs behaviour, audits and congested customs clearance locations are not significantly related
to the turnover growth of Kosovan SMEs. The exporter dummy variable proved to be insignificant. The
Volume 6, Number 1
23
Coefficients
P-value
35.752
12.950
0.001
-0.459
-2.381
11.698
-11.280
0.000
0.003
0.017
0.002
0.000
0.006
0.082
The robustness check using different sub-samples (such as one without exporting firms and one without
both exporting firms as well as firms having negative turnover growth) yielded the following results: in
both cases the appeals coefficient turned insignificant; all other results remained stable compared to our
main calculation. This draws attention to the fact that exporters and firms with negative growth were
more likely to be involved in troublesome customs appeals.
We also conducted an alternative calculation explaining the level of 2008 turnover in euros as the
dependent variable with additional explanatory variables such as turnover in 2007 as well as the squared
terms of the number of employees and consulting costs in order to check for possible endogeneity
and non-linearities. One abnormal observation had to be removed from the data set. Interestingly, the
results do not differ greatly from the growth model. Almost the same variables have coefficients of
the same sign (that is, positive/negative) and significance. Again, the managers education as well as
the consultancy costs prove to be positively correlated with the dependent variable. Only now, the
squared consulting costs have a negative coefficient. This implies that expenditure on consultancy in
customs issues exhibits a diminishing return. Instead of the number of employees, the squared number
of employees is significant in explaining less turnover. This indicates that, in terms of employees, only
larger firms are at a disadvantage. The number of firm years again has a negative coefficient. There are
no changes concerning the customs-related coefficients either. The coefficient for the use of procedures
with economic impact is positive and the coefficient for the appeals variable negative. In this model, the
R is more than 99%. This is certainly due to the inclusion of the lagged turnover variable.
24
Volume 6, Number 1
20862.060
1.104
20531.520
10.271
-0.001
-42.722
-3492.184
26436.700
-15595.480
P-value
0.172
0.000
0.015
0.000
0.029
0.036
0.004
0.001
0.097
N = 121
R = 99.4%
Estimator: Stepwise OLS, robust standard errors
25
Appendix
Appendix Table 1: Correlation between coefficients at a 10% level of significance
growth
turnov.
educat.
consult.
empl.
years
simple
econ
appeals
behav.
audit
hani
growth
1
-0.197
0.229
0.165
-0.166
-0.293
turnov.
0.223
-0.211
-0.207
educat. consult.
empl.
years
simple
econ
appeals
behav.
audit
hani
1
1
0.224
0.503
1
0.268
1
1
1
-0.287
1
1
-0.210
1
0.205
1
0.165
Mean
Std. Dev.
Minimum
Maximum
19.9
418942
23.9
507901
-88.8
28000
131.6
3135000
Education of managers
Consulting costs
0.344
2207
0.477
3201
0
0
1
13800
11.8
5.7
8.2
2.3
2
3
55
23
Simplified procedure
Procedure with economic impact
0.238
0.434
0.427
0.498
0
0
1
1
0.836
0.500
0.372
0.502
0
0
1
1
Audit
Hani
0.861
0.459
0.348
0.500
0
0
1
1
26
Volume 6, Number 1
References
Acemoglu, D 1995, Reward structures and the allocation of talent, European Economic Review,
vol. 39, no.1, pp.17-33.
Aevska, B, Bartlett, W & Stojanova, V 2002, Barriers to SME development in the Republic of Macedonia,
in W Bartlett, M Bateman & M. Vehovec (eds), Small enterprise development in South East Europe:
policy issues and future perspectives, Kluwer, Dordrecht.
Acs, Z & Audretsch, D 1990, Innovation and small firms, MIT Press, Cambridge.
Aidis, R 2005, Institutional barriers to small- and medium-sized enterprise development in transition
countries, Small Business Economics, vol. 25, no. 4, pp.305-18.
Aidis, R & Estrin, S 2006, Institutions, networks and entrepreneurship development in Russia: an
exploration, Discussion Paper Series, IZA, DP no. 2161.
Aidis, R, Estrin, S & Mickiewizs, T 2009, Entrepreneurial entry: which institutions matter?, Discussion
Paper Series, IZA, DP, no.4123.
Almus, M 2002, What characterizes a fast-growing firm?, Applied Economics, vol. 34, no. 12, pp.14971508.
Audretsch, DB 2007, The entrepreneurial society, Oxford University Press, Oxford.
Bartlett, W & Bukvi, B 2001, Barriers to SME growth in Slovenia, Economic Policy in Transition
Economies, vol. 11, no. 2, pp.177-95.
Bartlett, W & Prasnikar, J 1995, Small firms and economic transformation in Slovenia, Communist
Economies and Economic Transformation, vol.7, no.1, pp.81-101.
Baumol, W 1990, Entrepreneurship: productive, unproductive, and destructive, Journal of Political
Economy, vol.98, no.5, pp.893-921.
Becker, G 1964, Human capital, National Bureau of Economic Research, Columbia University Press,
New York.
Becker, G 1975, Human capital, University of Chicago Press, Chicago.
Blanchard, O 1997, The economics of post-communist transition, Oxford University Press, Oxford.
Bohata, M & Mladek, J 1999, The development of the Czech SME sector, Journal of Business
Venturing, vol.14, nos5-6, pp.461-73.
Caves, RE 1998, Industrial organization and new findings on the turnover and mobility of firms,
Journal of Economic Literature, vol.36, no.4, pp.1947-83.
Chandler, G & Hanks, S 1998, An examination of the substitutability of founders, human and financial
capital in emerging business ventures, Journal of Business Venturing, vol.13, no.5, pp.353-69.
Colombo, MG & Grilli, L 2005, Founders human capital and the growth of new technology-based
firms: a competence-based view, Research Policy, vol.34, no.6, pp.795-816.
Davidsson, P 2005, Method challenges and opportunities in the psychological study of entrepreneurship,
in R Baum, M Frese & R Baron (eds), The psychology of entrepreneurship, Lawrence Erlbaum
Associates, Mahwah, NJ.
Dixit, A 1989, Entry and exit decision under uncertainty, Journal of Political Economy, vol.97, no.3,
pp.620-38.
Djankov, S, La Porta, R, Lopez-de-Silanes, F & Shleifer, A 2002, The regulation of entry, Quarterly
Journal of Economics, vol.67, pp.1-37.
Estrin, S, Meyer, K & Bytchkova, M 2005, Entrepreneurship in transition economies, in M Casson,
BYeung, A Basu & N Wadeson (eds), The handbook of entrepreneurship, Oxford University Press,
London.
Volume 6, Number 1
27
Volume 6, Number 1
Notes
1 From June 1999 the territory of Kosovo was administered by the United Nations Mission in Kosovo (UNMIK). On 17February
2008, in an extraordinary session the parliament of Kosovo unilaterally declared Kosovos independence and with the promulgation
of the constitution of Kosovo, the institutions of the Republic of Kosovo took over all governance authorities.
2 We did not include firms that were inactive in the period 2005 to 2008.
3 http://europa.eu.int/comm/enterprise/enterprise_policy/sme_definition/index_en.htm.
4 The vast majority of Kosovo firms engaged in international trade are solely importing. The country has not yet developed a proper
export sector.
Volume 6, Number 1
29
Mario Holzner
Mario Holzner is staff economist at the Vienna Institute for International Economic
Studies. His research focuses on international trade, economic growth, income
distribution, and the economies of Southeast Europe. Mario completed a doctorate
at the Vienna University of Economics and Business administration (economics). In
his recent research, Mario analysed the effects of free trade agreements for Balkan
economies with the help of the Global Simulation Model (GSIM).
Florin Peci
Florin Peci has worked for 11 years on organisational development and management
reform in Kosovo Customs. He provided advice on issues concerning customs
performance on several United Nations and European Community-funded technical
assistance projects in Kosovo, and on issues concerning customs competencies,
customs legislation, performance measurement in Customs, and questions concerning
the design of customs management information systems. Currently, Florin is Head of
the Law Enforcement Department in Kosovo Customs and is a PhD candidate at the
Economic Faculty, University of Prishtina in Kosovo.
30
Volume 6, Number 1
Executive summary
A de minimis regime provides streamlined border clearance and exemption from customs duties and
other taxes. These features generate economic benefits by refocusing public revenue collection on more
efficient revenue sources, reducing the costs borne by importers, and accelerating the delivery of imports.
Most APEC economies have de minimis regimes but thresholds range from under USD1 to more than
USD1,000, and eligibility varies. These design features affect the balance of economic benefits and costs
that a regime produces.
This study assesses, in some detail, the de minimis regimes of Canada, Indonesia, Japan, Malaysia, the
Philippines, and Thailand the APEC-6 economies for ease of reference. We chose them as being
broadly representative of the APEC region in terms of geography and economic development. The study
has estimated the net economic benefit of four alternatives representing de minimis thresholds of
USD50, USD100, USD150, and USD200. Tables 1 and 2 have the key results.
The USD200 threshold generated the largest net economic benefit around USD5.9 billion a year for
the APEC-6, equivalent to about USD30.3 billion for all 21 APEC members. In relative terms the latter
is around 0.086% of APEC-21 gross domestic product (GDP).
Resource savings in government administration are the largest benefit. Under all scenarios, cuts in
government administration accounted for 76% of the benefits, while savings in business compliance
were virtually all of the rest. The latter are particularly important for small and medium sized enterprises
(SMEs) as they generally face disproportionate burdens in completing customs formalities.
Savings in time in transit have a clear economic benefit. The longer products take to get to market, the
more likely they will perish, become outdated, be displaced by superior alternatives, or lose the interest
of potential buyers. Previous research has shown that a 10% cut in delivery time will, other things
being equal, expand exports of time-sensitive manufactures by over 4%. For low value consignments,
however, the transit time savings are generally small compared to the others.
A notable characteristic of the results is the relatively small impact that an increase in threshold has on
government revenue. The loss of tariff revenue is less than 1% of the savings under the USD200 scenario
and only 0.7% of those under the USD100 scenario. Although the loss of VAT revenue is more difficult
to estimate, at worst it is no more than 4% of the savings under the USD200 scenario and less under the
rest.
The revenue loss is much lower than many may have expected. The potential revenue base has been
substantially eroded by preferential tariff rates under Free Trade Agreements (FTAs) and the existing
de minimis exemptions. This is true even for those economies that have relatively high applied Most
Favoured Nation (MFN) tariff rates.
The composition of the results is broadly the same for each of the scenarios and reflects the basic
economics of this category of imports relatively large numbers but relatively low aggregate value.
Hence the volume-based impacts, such as those on customs and business processing costs loom larger
than the value-based ones, such as those involving transit delays and tax collections.
Volume 6, Number 1
31
Alternative Threshold
USD
50
100
150
200
APEC-21
Net Economic
Benefit
0.16
19.8
25.0
30.3
Note: (a) Canada, Indonesia, Japan, Malaysia, the Philippines and Thailand.
Source: Estimates by ITS Global Asia Pacific.
Table 2: Net economic benefit of alternative de minimis thresholds, by selected APEC economy (a),
USD million per year
Alternative
Threshold
CA
ID
JP
MY
PH
TH
USD
50
100
150
200
30.6
3,771
4,662
5,453
0
38.8
44.4
48.7
0
0
104
304
0
0
0
22.5
0.28
16.9
18.7
20.7
0.35
61.8
70.3
78.5
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
Overall we judge our results to be robust. Indeed the conservative nature of our approach means that
more refined estimates are likely to yield higher net benefits than we have estimated not lower ones.
Most, if not all, APEC economies would benefit by increasing their existing thresholds by a substantial
amount. APEC could assist this process by agreeing to recommend a minimum threshold level to its
members with the option of a higher level to better suit individual circumstances. This would leverage
the benefits from unilateral action.
These conclusions have been strongly reinforced by recent research. For example, the Productivity
Commission, the Australian Governments independent economic advisory body, is currently reviewing
Australias de minimis regime. Although Australia has the highest de minimis threshold in APEC and a
substantial GST rate (10%), the Commission has found that any reduction in the threshold would impose
a substantial net cost on the economy.
An increase in de minimis thresholds need not jeopardise border security as advance cargo reporting
is required by most countries, irrespective of the declared value of the imports. A higher de minimis
threshold can free up the resources to address the more pressing security issues.
The policy implications are straightforward. A commercially attractive de minimis arrangement makes
sound economic sense. While the optimal level of the threshold remains an open question, the direction
of change in APEC is clear.
Volume 6, Number 1
33
Local Currency
CAD20
USD50
JPY10,000
MYR500
PHP15
THB1,000
Table 2.1 sets out the current de minimis threshold in each of the selected APEC economies in domestic
currency and its United States Dollar (USD) equivalent. Details of the legal and policy framework for
each de minimis regime follow, to the extent to which that information is publicly available.
34
Volume 6, Number 1
Volume 6, Number 1
35
36
Volume 6, Number 1
Volume 6, Number 1
37
Doing Business
(a)
Overall
Canada
Indonesia
Japan
Malaysia
Philippines
Thailand
7
121
18
21
148
19
Trading
Across
Borders
41
47
24
37
61
12
Overall
Customs
Efficiency
Timeliness
Overall
14
75
7
29
44
35
13
72
10
36
54
39
5
69
13
37
42
48
8
68
25
30
92
60
Border
Administration
18
67
16
44
74
41
Composite8
19/30/11
67/44/88
17/18/15
48/29/52
56/55/119
36/14/71
Notes: (a) Trading Across Borders rankings are based on three sub-indicators: all documents required by customs and other
agencies to export and import; document preparation, customs clearance and technical control, port and terminal handling, inland
transport and handling (time taken to export and import); and cost in USD per 20-foot container, no bribes or tariffs included
(World Bank Group 2010a). (b) Logistics Performance Index components are: efficiency of the customs clearance process; quality
of trade and transport-related infrastructure; ease of arranging competitively priced shipments; competence and quality of logistics
services; ability to track and trace consignments; frequency with which shipments reach the consignee within the scheduled or
expected time (World Bank Group 2010b). (c) Global Enabling Trade Report, Border Administration sub-index components are:
efficiency of customs administration, efficiency of import-export procedures, transparency of border administration (WEF 2010).
Volume 6, Number 1
Volume 6, Number 1
39
Volume 6, Number 1
Procedure
Document preparation
Customs clearance & inspection
Port & terminal handling
Inland transport from seaport to
importers premises
ALL
Mean
13.7
3.7
4.5
As % of total
51.7
14.0
16.8
Mean
306.1
213.7
317.0
As % of total
19.0
13.2
19.6
4.7
17.5
778.0
48.2
26.6
100
1614.8
100
Notes: (a) The time taken and the fees incurred in importing a shipping container of widely traded non-perishable merchandise
(b) twenty-foot equivalent unit, a standardised measure of shipping container volume.
Adapted from Hornok and Koren (2010) and World Bank Group (2010a).
In fact traders react to any increase in administrative burden by sending fewer shipments of larger size
and use larger-shipment transport modes more often to spread the freight and administrative costs over
a larger number of individual items.
In extreme cases it may lead to the cessation of trade with that country altogether (Hornok & Koren
2010; Productivity Commission 2011). The de minimis level therefore has a flow-on effect on choice of
transport mode and therefore on the total landed cost of goods. It can mean that what was an economic
transaction becomes uneconomic because:
Volume 6, Number 1
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42
Volume 6, Number 1
The ACBPS report on this compliance campaign does not provide any detail on the resource and
administrative costs that were associated with the campaign so it is not possible to provide a cost-benefit
analysis. However, the ratio of non-compliance against interventions is about 3%. This places some
question marks over its cost-effectiveness, particularly when combined with the reports conclusion that
estimates of the revenue leakage due to non-compliance with the low-value threshold were 0.66% of
total revenue collected in the 2009-2010 financial year (ACBPS 2001, p. 5).
Similarly, an increase in de minimis thresholds does not jeopardise border security since advance cargo
reporting is required by most APEC economies, irrespective of the declared value of the goods. As
Hufbauer and Wong point out in their research in relation to the United States, de minimis thresholds can
actually have the effect of freeing up resourcesto deal with more important security and product safety
issues (Hufbauer & Wong 2011, p. 2).
Volume 6, Number 1
43
What is clear is that accurate data is necessary for governments to make an informed decision as to where
they should set the de minimis threshold for their economy. As the Productivity Commission has stated:
A number of factors affect the calculation of the amount of revenue foregone and the possible impact
of any changes to the threshold. The accuracy of any estimates will be affected by the reliability of
data on the:
N
umber, value, and distribution of low value consignments entering [Australia] through
international mail, air cargo and sea cargo;
Rate of duty applicable to low value consignments;
V
alue of consignments which are GST [VAT] exempt, addressed to businesses registered for
GST [VAT], or to non-profit organisations exempt from GST [VAT];
L
evel of other costs (such as freight, insurance and customs duty) which may be included in
calculations of the value of taxable importation for calculation of GST [VAT]; and
E
xtent to which any change in the threshold may affect the behaviour of importers and alter
the value of consignments entering [Australia] (Productivity Commission 2011, p. 168).
Again, as a comparison, it is interesting to note that the Common Market for East and Southern Africa
(COMESA) and the East African Community have each adopted a threshold of USD500 in support of
simplified customs documentation and procedures so as to facilitate trade between their members.9 Box
3.2 has the details.
Box 3.2: Case Study Common Market for East and Southern Africa
COMESA SIMPLIFIED CUSTOMS AND ORIGIN DOCUMENTATION
A simplified trade regime for selected types of commodities is being promoted by COMESA member countries.
Small-scale traders benefit from a simplified customs document and a simplified certificate of origin. Goods that originate from
COMESA member states and whose value does not exceed USD 500 per consignment qualify automatically for duty-free entry
anywhere in the COMESA market. In the East African Community too, a simplified certificate of origin for cross-border trade
of a maximum value of USD500 is in force since the 1st July 2007.
This was agreed by COMESA Trade Ministers at the Business Summit and Exhibition held in Kigali, Rwanda in May 2007. It
intended to apply initially to maize, rice, beans and traditional food crops such as cassava, as well as cotton and dairy products.
Source: OECD 2009, p. 39.
44
Volume 6, Number 1
APEC-21
Net Economic
Benefit
0.16
19.8
25.0
30.3
Note: (a) Canada, Indonesia, Japan, Malaysia, the Philippines and Thailand.
Source: Estimates by ITS Global Asia Pacific.
Volume 6, Number 1
45
CA
ID
JP
MY
USD
50
100
150
200
30.6
3,771
4,662
5,453
0
38.8
44.4
48.7
0
0
104
304
0
0
0
22.5
PH
0.28
16.9
18.7
20.7
TH
0.35
61.8
70.3
78.5
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
Table 4.3: Composition of net economic benefit of alternative de minimis thresholds, select APEC
economies (a), USD million per year
Component of Net Economic Benefit
Saving in merchandise transit time
Saving in government administration
Saving in business compliance
Less Tax revenue foregone
Net economic benefit
Benefit-cost ratio (b)
USD 50
0.07
23.92
7.38
0.12
31.26
270
Alternative Threshold
USD 100
USD 150
16
26
2,981
3,765
920
1,157
29
40
3,917
4,900
137
125
USD 200
33
4,548
1,399
52
5,928
115
Notes: (a) Canada, Indonesia, Japan, Malaysia, the Philippines and Thailand (b) The ratio of the total resource savings to the tax
revenue foregone.
Source: Estimates by ITS Global Asia Pacific.
Table 4.2 breaks down the aggregate net benefit estimate for APEC-6 by individual economy, while
Table 4.3 breaks it down by its functional components the resource savings that would be generated
in merchandise transit time, government administration, and business compliance, and the costs in terms
of the tax revenue foregone from extending the taxation exemptions.
In summary, we estimate that a minimum de minimis threshold of USD200 would generate an aggregate
net benefit for the APEC-6 economies of around USD5.9 billion a year. This is equivalent to about
USD30.3 billion for all 21 APEC members or some 0.086% of APEC-21 GDP.
4.1.2 Results for individual economies
All six economies would realise a net benefit from raising their de minimis threshold, no matter how
small the increase. Where a scenario would not change an economys threshold, of course, there was
neither any benefit nor any cost. This was the case for Malaysia under the USD150, USD100 and USD50
scenarios, for Japan under the USD100 and USD50 scenarios, and for Indonesia under the USD50
scenario.12
The size of the net benefit varied substantially across the six economies. Most of the variation reflected
a combination of the extent of an economys current de minimis threshold and the stage reached in its
economic development. The higher an economys GDP per capita, the more intensively it tends to use
low value imports for business (intermediate inputs) and household use (final consumption). The most
obvious manifestation of this characteristic is the increasing tendency to use air freight for the delivery
of low value consignments, even though it is significantly more expensive than mail or sea freight. For
these reasons, expressing the net economic benefit as a share of GDP can provide a better indication of
the results from a comparative perspective.
46
Volume 6, Number 1
47
48
Volume 6, Number 1
CA
ID
JP
MY
PH
TH
50
100
150
200
15.33
2,165
3,030
3,720
1.05
105
128
140
6.39
661
822
915
1.80
199
305
353
0.76
83
102
115
1.08
121
156
182
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC, CIE 2011, and estimates by ITS Global Asia Pacific.
Table 4.4: Projected volume of de minimis imports by air, sea & mail under alternative thresholds, by
APEC economy (a), thousand consignments per year
Alternative
Threshold
USD
CA
ID
JP
MY
PH
TH
50
100
150
200
846
61,950
76,394
89,206
84
5,03
5,630
6,156
483
29,332
33,228
36,637
96
6,323
7,924
9,061
56
3,469
3,930
4,351
82
5,078
5,827
6,510
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
The projections in Tables 4.3 and 4.4 have a number of notable features.
The projected volume of consignments of USD200 or less by all modes for Indonesia is consistent with
the Indonesian customs data on this category provided by Trade Data International Annex D has
the details. After adjusting for timing differences, the projections in Tables 4.3 and 4.4 are only 10%
less than the volumes recorded in the customs data This suggest that the projection methodology and
assumptions are broadly reliable, if somewhat conservative.
Volume 6, Number 1
49
Volume 6, Number 1
CA
ID
JP
MY
PH
38.74
48.19
5.06
6.29
36.61
45.53
14.14
17.58
3.37
4.19
TH
8.38
10.42
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
Volume 6, Number 1
51
Volume 6, Number 1
CA
ID
JP
MY
PH
TH
14.46
14.46
1.89
1.89
13.66
13.66
5.27
5.27
1.26
1.26
3.13
3.13
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
53
CA
ID
JP
MY
PH
TH
0.5
0.6
1.6
2.4
0.5
1.2
0.5
0.6
1.6
1.2
1.3
1.2
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
To put these results into an appropriate context, the World Banks annual series of Trading across
Borders surveys have consistently put Japan well below the APEC average in terms of the time taken
by importers in negotiating what the survey terms as Customs clearance and technical control (World
Bank Group 2010). From this we conclude that the transit saving achieved through the Japanese AEO
program should, as a minimum, approximate what could be achieved through the de minimis clearance
of sea cargo.
Accordingly we have used a saving of 60% to estimate the transit time saving for sea cargo by all of
the APEC-6 economies. It has been applied to the total time taken in 2010 by sea cargoes to complete
customs clearance and technical control in each of the APEC-6 economies, as estimated by the World
Bank from its annual Trading across Border survey (World Bank Group 2010).
This is a conservative assumption. Greater savings should be possible. Nevertheless, the relatively low
value-to-volume ratio that applies to low value imports means that the value of the time savings are
small relative to the savings based on transaction volume such as public administration and private
compliance costs.
Volume 6, Number 1
CA
ID
JP
MY
PH
4.70
7.70
1.66
14.68
6.79
0.77
2.45
1.55
7.14
3.59
5.33
0.77
2.43
0.28
0.97
3.59
5.31
TH
10.41
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH)
(b) MTN rate less adjustment for preferential tariff rates under existing FTAs
(c) Applied rate less deduction for de minimis exemptions.
Source: WTO; estimates by ITS Global Asia Pacific.
Our estimate involved weighting the MFN tariff rates in the tariff schedule for each economy in the study
by the product shares at the four-digit HS level we previously calculated for imports of USD200 or less
per consignment Annex B has the details of the estimation of the product shares.
Multiplying the average MFN rate by our projection of the increase in value of de minimis imports up
to the proposed de minimis threshold level gave an approximation of the potential revenue loss for the
threshold scenario in question. It needs to be adjusted, however, for the impacts of preferential tariff rates
and the current de minimis revenue exemptions.
Since it established the ASEAN Free Trade Area (AFTA) in the early 1990s, ASEAN has concluded five
FTAs with major trading partners, including China (2002), the Republic of Korea (2005), Japan (2008),
India (2009) and Australia and New Zealand (2009). ASEAN has also concluded the ASEAN Trade in
Goods Agreement (ATIGA) to complete the process of tariff liberalisation within ASEAN by 2010 for
the original six member states and by 2018 for the newer ones.
The depth, scope and pace of tariff liberalisation under each agreement varies by ASEAN economy,
product and trading partner. In some agreements, such as the ASEANIndia FTA, certain sectors
or products are excluded from the liberalisation provisions in the Agreement. In others, such as the
AANZFTA, scope of the tariff liberalisation is far more comprehensive.
The time available for the study did not allow for a highly time consuming, product-by-product
assessment of each of the four ASEAN economies, let alone of Canada and Japan as well. We have
therefore assumed that all low value imports by the five from any of their FTA partners are duty free.
We have applied a similar assumption to Canada in respect of its North American Free Trade Agreement
(NAFTA) partners and Japan in respect of its FTA partners.
Adjusting for the duty free rates we have assumed are in the process of being applied to imports from
FTA partners, gives an estimate of the effective applied tariff rate for each of the APEC-6 economies in
the study. They are presented in Table 4.8.
We have also assumed that the tariff revenue lost due to the existing de mininis threshold is the existing
threshold level as a percentage of the threshold level specified in the scenario under analysis. This
Volume 6, Number 1
55
Alternative Threshold
USD
50
100
150
200
APEC-21
Net Economic
Benefit
0.16
19.2
24.0
29.0
Notes: (a) Canada, Indonesia, Japan, Malaysia, the Philippines and Thailand.
Source: Estimates by ITS Global Asia Pacific.
Table 4.11: Net economic benefit of alternative de minimis thresholds, by APEC economy (a), VAT
sensitivity test, USD million per year
Alternative
Threshold
USD
CA
ID
JP
MY
PH
TH
50
100
150
200
30.2
3,663
4,511
5,268
0
28.48
31.7
34.9
0
0
101
296
0
0
0
17.7
0.2
8.6
8.5
9.2
0.3
53.4
59.5
65.8
Notes: (a) Canada (CA), Indonesia (ID), Japan (JP), Malaysia (MY), the Philippines (PH) and Thailand (TH).
Source: CAPEC and Trade Data International Pty Ltd, estimates by ITS Global Asia Pacific.
The message of the sensitivity test is clear-cut. The loss of VAT revenue does not qualitatively change
any of the results that were discussed above.
56
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57
58
Volume 6, Number 1
References
APEC 2007, APECs Second trade facilitation action plan, APEC Secretariat, Singapore, September.
Australian Customs and Border Protection Service (ACBPS) 2011, Low value import threshold
enhanced compliance campaign report, January-March 2011, 14 June, ACBPS, Canberra.
Australian Customs Service 2006, Changes to import processing charges, Australian Customs
Notice No. 2006/21, April, viewed 25 July 2011, www.customs.gov.au/webdata/resources/notices/
ACN0621.pdf.
Brooks, Douglas H & Stone, Susan F 2010, Infrastructure and trade facilitation in Asian APEC, Asian
Development Review, Asian Development Bank, Manila, Philippines, vol. 27, no. 1, pp. 135-59.
Centre for International Economics (CIE) 2011, The GST threshold for low value products: economic
analysis, report prepared for the Conference of Asia Pacific Express Carriers, Canberra & Sydney,
May.
De Souza, R, Goh, M, Gupta, S & Luo, L 2007, An investigation into the measures affecting the
integration of ASEANs priority sectors (Phase 2): the case of logistics, April, ASEAN Secretariat,
Jakarta.
Djankov, S, Freund, C, & Pham, CS 2010, Trading on time, The Review of Economics and Statistics,
vol. 92, no. 1, pp. 166-73.
Hornok, C & Koren, M 2010, Administrative barriers to trade, mimeo, August.
Hufbauer, GC & Wong, Y 2011, Logistics reform for low-value shipments, Policy Brief No. PB 11-7,
June, Peterson Institute for International Economics, Washington, DC.
Hummels, D 2001a, Time as a trade barrier, GTAP Working Paper, No. 18, Centre for Global Trade
Analysis, Department of Agricultural Economics, Purdue University, Lafayette, IN.
Hummels, D 2001b, Towards a geography of trade costs, GTAP Working Paper, Centre for Global Trade
Analysis, Department of Agricultural Economics, Purdue University, Lafayette, IN.
Hummels, D 2007, Calculating tariff equivalents for time in trade, report prepared for the United States
Agency for International Development, Nathan Associates, Washington, DC, March.
Igarashi, K 2010, Japan Customs experience in conducting Time Release Studies, Presentation to
CAREC Time Release Study Seminar, Central Asia Regional Economic Cooperation (CAREC)
Program of the Asian Development Bank, Asian Development Bank Institute, Tokyo, 8-10 September,
www.carecinstitute.org/uploads/events/2010/9th-CCC/Day2-JPN-Customs-TRS-Experience.pdf.
International Monetary Fund (IMF) 2011, World Economic Outlook April 2011 Tensions from the
two-speed recovery: unemployment, commodities, and capital flows, IMF, Washington, DC, April,
http://www.imf.org/external/pubs/ft/weo/2011/01/index.htm.
New Zealand Customs Service 2011, Issues paper: review of de minimis, February, New Zealand
Customs Service, Wellington, NZ.
Lesser, L & Mois-Leeman, E 2009, ;Informal cross-border trade and trade facilitation reform in SubSaharan Africa, OECD Trade Policy Working Paper No. 86, 18February Organisation for Economic
Co-operation and Development, Paris.
Productivity Commission 2011, Economic structure and performance of the Australian retail industry,
Chapter 6: Appropriateness of current indirect tax arrangements, Draft Report, Productivity
Commission, Canberra.
Policy Support Unit (PSU) 2010, Reducing trade transaction costs in APEC economies by 5%: progress
with achieving the goals of TFAP II: interim assessment of TFAP II, APEC Secretariat, Singapore.
Policy Support Unit (PSU) 2011 (forthcoming), Final assessment of TFAP II: direct estimation of trade
transaction costs, APEC Secretariat, Singapore.
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Notes
1 The views expressed in this report are those of its authors. The consultants, ITS Global Asia Pacific (ITS) and
the Centre for Customs and Excise Studies (CCES), take no liability for commercial decisions taken on the basis
of information in this report. The information is accurate to the best of the consultants knowledge, however the
consultants advise that no decision with commercial implications which depends upon government law or regulation
or executive discretion should be taken by any person or entity without that partys having secured direct advice from
the government agency concerned in writing.
2 Transaction costs are the resource costs incurred in searching out, negotiating, and completing an economic exchange.
They include the costs that government regulation and taxation imposes on these processes. Transaction costs need to
be distinguished from the costs of producing what is exchanged, which are sometimes referred to as transformation
costs to underline this distinction.
3 Financial Administration Act, section 17, Order-in-Council P.C. 1985-2954, October 3, 1985 (Canada Gazette,
Part II, p. 4291) as amended by Order-in-Council P.C. 1986-1400, June 12, 1986 (Canada Gazette), Part II, p. 2616)
and Order-in-Council P.C. 1992-1432, June 24, 1992 (Canada Gazette, Part II, p.3098).
4 Financial Administration Act, section 17, Order-in-Council P.C. 2955 as amended by Order-in-Council P.C.
1986-1401 and Order-in-Council P.C. 1992-1431.
5 The principal articles that have been designated as those to which duty exemption is not applicable are as follows:
Leather bags, handbags, gloves, etc., knitted apparel, ski boots, leather shoes and footwear with leather soles.
6 The original legislation specified a threshold of PHP10 but it was amended subsequently.
7 A Bill to increase the threshold to PHP 2,500 has been introduced into the Philippines Senate but it does not seem to
have been passed at this time.
8 This composite figure represents the sub-index breakdown as outlined above.
9 The Member States of COMESA are Burundi, Comoros, the Democratic Republic of the Congo, Djibouti, Egypt,
Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, the Seychelles, the Sudan, Swaziland,
Uganda, Zambia, and Zimbabwe.
10 Annexes A to D are available from the authors. If you wish to view them, please email editor@worldcustomsjournal.
org.
11 These estimates are based on the April 2011 edition of the World Economic Outlook database (IMF 2011).
12 This is because their existing thresholds are equivalent to USD150 (Malaysia), USD129 (Japan) and USD50
(Indonesia).
13 This intensity is measured in terms of the total value of imports, valued at USD200 per consignment or less, as a share
of GDP.
14 Among other things, the inquiry by the Australian Productivity Commission is examining the de minimis arrangements
that apply in Australia. On 4 August 2011 the Commission has released its Draft Report for public comment
(Productivity Commission 2011).
15 The approach may be expressed formally as follows: TV [total value of imports by all modes] = TVa [total value of
imports by air cargo] / Sa [air cargos share of the total value of all imports by all modes].
16 The ISO 3166 codes are: CA (Canada); ID (Indonesia); JP (Japan); MY (Malaysia); PH (the Philippines); and TH
(Thailand).
17 General Agreement on Tariffs and Trade (GATT 1954), Article VII.1.
18 The legal authority for this is the Import Processing Charges Act 2001. The charges are widely published by the
Service (Australian Customs Service 2006). As far as we are aware, Australia is the only APEC economy that has
mandated the full recovery of customs processing costs.
19 The conversion was at a USD to AUD exchange rate of 1.1000.
20 The GDP and employment data in question were sourced from the April 2011 edition of the World Economic Outlook
database (IMF 2011).
21 The current de minimis threshold in the United States is USD200 (PC 2011).
22 An Approved Economic Operator (AEO) is a private business involved in the international movement of goods in
whatever function that has been approved by or on behalf of a national Customs administration as complying with
World Customs Organization or equivalent supply chain security standards. The requirement for an AEO program is
a key component of the WCO Framework of Standards to Secure and Facilitate Global Trade (SAFE) (WCO 2007).
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Stephen Holloway
Steve Holloway, Dean of Studies (Education/Research) and Principal Director of the
Centre for Customs and Excise Studies, and an Adjunct Professor in the Faculty of
Business, Government and Law, University of Canberra, has had 25 years experience
in customs and international trade, including 20 years with the Australian Customs
Service. He has worked closely with international organisations, customs and revenue
administrations and the private sector on international trade and border management
including customs reform and modernisation, international logistics, the international
regulation of intellectual property, legislative reform and strategic export controls.
Steve holds a Bachelor of Laws from the Australian National University, a Masters
degree in International Customs Law and Administration from the University
of Canberra, and is admitted as a Barrister and Solicitor of the Australian Capital
Territory Supreme Court and a Barrister of the Federal and High Courts of Australia.
Jeffrey Rae
Jeffrey Rae is Chief Economist with ITS Global Asia Pacific and has more than
three decades of experience in policy analysis and advice involving a wide range of
domestic and international issues in the public and private sectors, both in Australia
and overseas.
Jeffs experience has involved research and advice on international trade, including
the transaction costs that are imposed on merchandise trade by government regulation
and other policy measures along international supply chains. He was responsible
for the development of the methodology that has been used for the estimation of
trade transaction costs in APEC economies and oversaw the application of that
methodology to both the Interim and Final Assessments of the Second APEC Trade
Facilitation Action Plan, which his firm conducted for the APEC Secretariat. This
program was the precursor to APECs Supply Chain Connectivity Framework Action
Plan.
Prior to moving into private consultancy, Jeff held senior executive positions in
several Australian Government departments, was seconded to the OECD, Paris, and
has presided over or participated in a number of public inquiries.
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Abstract
Asia and the Pacific region is becoming the centre of global attention due to its
rapid economic growth in the past few decades. The global financial crisis has made
it imperative for the countries in the region to take measures to stimulate domestic
demand and to increase intra-regional trade to sustain the growth momentum. As the
regional arm of the United Nations, the Economic and Social Commission for Asia and
the Pacific (ESCAP) has been working with its member countries to address the barriers
that impede trade and transport in the region. ESCAP has taken various initiatives to
promote the regional connectivity holistically by narrowing the infrastructure gaps as
well as minimising the institutional deficiencies. Coordinated border management is
an important component of the latter. Border delays constitute a major bottleneck to
the smooth movement of goods in the region and countries in the region are taking
concerted measures to address these issues. Experience has shown that there are various
approaches to coordinated border management and some of the better practices demand
detailed and careful planning. In particular, border agencies specifically Customs
need to redefine their standalone role and more importantly, their role as part of the
coordinated border management team.
1. Introduction
The World Bank, in its inaugural edition of Global Development Horizons3 states explicitly that the
world economy is undergoing a major transformation. As indicated in the report, By 2025, six major
emerging economiesBrazil, China, India, Indonesia, South Korea, and Russiawill account for more
than half of all global growth, Countries in Asia, in general, are going through an exciting phase of
their development. The growth model produce in Asia and sell in the West has come under pressure
due to weak demand in the developed markets. To sustain the growth, the emphasis is shifting towards
increasing intra-regional trade and spurring the domestic demand, and this poses formidable challenges
for the countries in the region.
Boosting intra-regional trade and stimulating domestic demand need investment in infrastructure
(hardware) as well as measures to address the institutional and legal barriers (software) to trade and
transport in the region. Both these areas need persistent and sustained efforts over a long time, and there
are no quick solutions. However, the countries in the region are increasingly realising the importance of
intra-regional trade as a means to sustain their growth and are taking steps at sub-regional and regional
levels to address the issues involved. This paper reviews the state of coordinated border management/
joint controls in Asia and the Pacific4 based on the existing literature with the aim of finding lessons to
be learned and good practices that can serve as benchmarks for countries intending to introduce these
controls as a means of addressing the border delays.
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Central Asia
Most countries of Central Asia are landlocked leading to high costs of transportation for much of their
trade. Having seamless transit regimes is important for landlocked countries to reduce the cost of
transportation. Most countries in the subregion are signatories to the Harmonization Convention. To
address the special needs of the landlocked countries there has been considerable international effort.
The Almaty Programme of Action is one of the significant initiatives. Among many things, it emphasises
financial investments in projects to improve the existing border posts and/or to establish new joint border
posts. Initiatives and actions by some other organisations to promote coordinated border management in
Central Asia are discussed below.
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South Asia
Intra-subregional trade in South Asia is only two per cent as compared to 26 per cent in South East Asia.
Despite the long land border between India and Pakistan, there are only a few border crossings and the
cross-border movement of goods is severely restricted. On the Indo-Nepal border there are numerous
Land Customs Stations (LCSs) but traffic is high only at two of them. There are also no institutional
arrangements for coordinated border management or joint controls to facilitate cross-border movement
of goods. Nepal is a landlocked country and the transit trade of Nepal is governed by an Indo-Nepal
trade and transit treaty that is renewable every five years. Most of the countries in the subregion have not
acceded to the Harmonization Convention.
Inefficient border crossings are a major deterrent to growth of intra-subregional trade in South Asia. A
study16 conducted in 2008 regarding transit regimes and border crossings in the eastern part of South
Asia found that out of the nine border crossings in India, Nepal, Bangladesh, and Bhutan, only one was
relatively efficient while the rest were relatively inefficient in both physical and non-physical parameters.
Among the non-physical barriers, the study found that customs authorities in the subregion still require
excessive documentation for imports. It further found that implementation of e-governance at the border,
including e-Customs was a significant determinant of intra-subregional trade. Another finding of the
study was that a 10 per cent reduction in the border transaction cost can lead to a three per cent increase
in the exports of the country.
The study concluded that to realise full benefits of trade liberalisation, the countries in the subregion
should give top priority to improving the efficiency at border crossings and bring adjacent border
crossings up to similar levels of efficiency to remove asymmetries and to expedite the movement of
goods. Despite this state of affairs in general, some scattered efforts are being made in the subregion
to facilitate cross-border trade. In May 201117 India and Bangladesh Customs agreed upon a Standard
Operating Procedure (SOP) to be followed at the four border crossings to expedite customs clearances.
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5. Lessons learned
The advantages of coordinated border management are conceptually easy to understand, but experience
suggests that it is not easy to execute. The real challenge lies in its implementation, whether it is behind
the border or across the border. The following are some of the lessons that can be learned, based on the
experience of coordinated border management in Asia and the Pacific.
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7. Conclusions
Better coordinated border management is one of the ten building blocks21 of the Customs in the 21st
Century vision adopted by the WCO Council in 2008 for enhancing customs operations globally.
There is already a call to include coordinated border management as the third pillar of the WCOs
SAFE Framework of Standards, in addition to the two pillars of the Customs-to-Customs network and
Customs-to-Business partnership to further fortify the global supply chains. As can be seen in this paper,
countries in Asia and the Pacific region have realised the importance of addressing border delays through
coordinated border management and are taking tangible steps in this direction. Further, it is evident that
different models and approaches are prevalent in the region. The aim of the paper was to distil some of
the best practices in coordinated border management based on the experience of those Asian and Pacific
region countries that may be useful to other countries contemplating such measures, and reinforcing
them in those countries already implementing such practices.
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References
Arvis, J-F, Mustra, MA, Panzer, J, Ojala, L & Naula, T 2007, Connecting to compete: trade logistics in
the global economy, The World Bank, Washington, DC.
De, P, Khan, AR & Chaturvedi, S 2008, Transit and trade barriers in Eastern South Asia: a review of
transit regime and performance of strategic border crossings, Asia-Pacific Research and Training
Network on Trade, Working Paper Series, No. 56, June, ESCAP, Bangkok, www.artnetontrade.org.
Global Facilitation Partnership for Transportation and Trade 2005, Explanatory Note on Integrated
Border Management, June.
Kieck, E, 2009, Coordinated border management: unlocking trade opportunities through one-stop
border posts, World Customs Journal, vol. 4, no. 1, pp. 3-13.
United Nations Conference on Trade and Development (UNCTAD) 2008, Technical Note No. 14, Border
Agency Coordination/Cooperation.
United Nations Development Programme (UNDP) 2007, Integrated Border Management Handbook for
Central Asia.
United Nations Economic Commission for Europe (UNECE) 1982, International Convention on
Harmonization of frontier control of goods, Inland Transport Committee, UNECE, Geneva, http://
ec.europa.eu/world/agreements/prepareCreateTreatiesWorkspace/treatiesGeneralData.do?step=0&re
direct=true&treatyId=509.
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) 2010, Improving
border management to facilitate trade in SPECA: challenges and prospects, UNESCAP, Bangkok,
Thailand.
World Bank 2005, Customs modernization handbook, World Bank, Washington, DC.
World Bank 2011, Border management modernization, World Bank, Washington, DC.
World Bank 2011, Global development horizons, multi-polarity: the new global economy, World Bank,
Washington, DC.
World Customs Organization (WCO) 1999, International Convention on the Simplification and
Harmonization of Customs Procedures (as amended), (Revised Kyoto Convention), General Annex,
WCO, Brussels, Belgium.
World Customs Organization (WCO) 2005, WCO SAFE Framework of standards to secure and facilitate
global trade (SAFE Framework), www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/
SAFE%20Framework_EN_2007_for_publication.pdf.
World Customs Organization (WCO) 2009a, Summary Report on Inter Agency Forum on Coordinated
Border Management, 29-30 June 2009, WCO, Brussels, Belgium.
World Customs Organization (WCO) 2009b, Coordinated border management: a concept paper,
prepared as background paper for interagency forum on Coordinated Border Management, June,
WCO, Brussels, Belgium.
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Notes
1 This paper was presented at the 6th WCO PICARD Conference, Promote research-based knowledge to support Customs
decision-making, held at the United Nations Economic Commission for Europe (UNECE), Geneva, Switzerland, 14-16
September 2011.
2 The views expressed in this paper are those of the author and do not necessarily reflect the views of the United Nations.
3 Global Development Horizons 2011, available at: http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/
EXTDECPROSPECTS/EXTGDH/0,,menuPK:7933477~pagePK:64167702~piPK:64167676~theSitePK:7933464,00.html.
4 The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) consists of 62 member and associate
member countries from both Asia and Pacific island states. For the purpose of this paper and because they are more relevant,
the state of play of Coordinated border management in various subregions of Asia has been discussed.
5 The resolution can be accessed at: www.unescap.org/ttdw/Publications/TIS_pubs/pub_2182/tarns_annex1.pdf.
6 The Busan Declaration on Transport Development in Asia and the Pacific can be accessed at the ESCAP website: www.
unescap.org/ttdw/common/TIS/TAR/text/busan_declaration_11nov06.pdf.
7 Details of the agreement are available at: www.unescap.org/ttdw/common/tis/ah/IGA_intro.asp.
8 Details of the agreement are available at: www.unescap.org/ttdw/common/TIS/TAR/tar_home.asp.
9 The professional drivers collect the data about the conditions of international road transport during commercial deliveries and
data is analysed using the time-cost methodology of ESCAP. Detailed information is available at: www.iru-nelti.org/index/
en_index.
10 The European Unions BOMCA, Phase 7, Description of Action, p. 12, Programme Strategy for IBM: Intra-agency and
inter-agency and international cooperation to provide for effective and efficient processing of people and goods and increased
security throughout Central Asia; Adequately equipped international border crossing point at strategic locations, where
responsibilities of staff of Border crossing, Customs and other agencies involved in the border management are clearly defined
and understood and executed professionally and efficiently and where the above conditions apply, joint cross border control
procedures will be speeded up and Customs revenue increased; Legal trade and transit will be facilitated and transit times
reduced; Illegal trafficking will be made more difficult and interdiction of contraband increased; Staffing level and associated
costs will be reduced; Opportunities for corruption will be reduced through joint border control.
11 CAREC is a partnership of 10 countries of Central Asia and six multilateral institutions. It promotes development in the
region through regional economic cooperation. It focuses on energy, transport, trade facilitation, and trade policy. The trade
facilitation program has two major components of work: customs cooperation and integrated trade facilitation.
12 CAREC Transport and trade facilitation progress and work plan 2010-2011, p. 4, para. 25, www.carecinstitute.org/uploads/
events/2010/SOM-Oct/Progress-Report-Transport-and-Trade-Facilitation.pdf.
13 Based on the presentation made Mr Hasan Boze, Ministry of Transport, Turkey at the Regional Meeting on Cooperation
for Facilitation of International Road Transport held in Beijing, 30 May to 1 June 2011, www.unescap.org/ttdw/common/
Meetings/TFS/2011Regional-Road-Tx/Countries/Turkey.pdf.
14 The MOU is available at: www.adb.org/Documents/Others/GMS-Agreement/MOU-Poipet-Aranyaprathet.pdf.
15 United Nations Conference on Trade and Development 2008, Technical Note No. 14, Border Agency Coordination/Cooperation,
p. 2.
16 De, Khan & Chaturvedi 2008.
17 The details are available in Facility No. 02/2011 issued by Shillong Customs, http://shillongCustoms.nic.in/facility_2_2011.
pdf.
18 The brief on integrated check posts is available at the Ministry of Home Affairs, http://mha.nic.in/pdfs/BM-DQR-280611.pdf.
19 An Authorised Economic Operator (AEO) is a stakeholder in international trade whose activities have been approved by
national customs administrations as complying with the World Customs Organizations (WCO) SAFE Framework of Standards
to Secure and Facilitate Global Trade (SAFE Framework). More information is available at: www.wcoomd.org/files/1.%20
Public%20files/PDFandDocuments/Procedures%20and%20Facilitation/safe_package/safe_package_I.pdf.
20 The Islamic Republic of Iran acceded to the convention on 20 July 2011, taking the total number of contracting parties to the
Revised Kyoto Convention to 77. For more information, see www.wcoomd.org/press/default.aspx?lid=1&id=267.
21 The details of ten building blocks are available at: www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/
Speeches_Reports/2008/CLECAT%203%20Dec%202008.pdf.
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Section 2
Practitioner
Contributions
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Abstract
This paper provides an introduction to the Time Release Study (TRS) Guide Version 21
developed by the World Customs Organization (WCO) in 2011. It includes an overview
and new aspects of the WCO TRS Guide and examples of TRS results. The paper also
covers the main focus of the TRS and explores ways of using the TRS methodology
in an international environment to measure the performance of a supply chain and an
international corridor which are key to further strengthening regional cooperation and
integration.
1. Introduction
Globalisation has brought about a dramatic increase in cross-border trading. As a result there has been
an equally important focus on trade and regulatory processes conducted at the border to ensure they are
optimised and that the time required for trade-related procedures is reduced, where appropriate. Just-intime delivery of goods has grown in importance for businesses and brings significant benefits to all parties
involved in the supply chain. Customs administrations have endeavoured to harmonise and simplify
their procedures through international standards such as the World Customs Organizations (WCO)
Revised Kyoto Convention,2 the WCO Data Model version 3.0,3 and widespread use of information and
communications technology (ICT). More recently, heightened dialogue has been established between the
trading community and Customs. Indeed, the trading community is increasingly working in partnership
with Customs to deliver common solutions in response to these critically important trade facilitation
objectives.
Customs administrations have also been making efforts to streamline interagency procedures at borders.
In order to ensure that facilitation measures are being applied effectively, a Time Release Study (TRS)
has been used to improve the performance of the function being measured. A TRS is a unique tool and
method for measuring the actual performance of border activities, and customs procedures in particular,
as they directly relate to trade facilitation at the border. In 2011 the WCO revised its Guide to Measure the
Time Required for the Release of Goods (TRS Guide) in order to keep pace with current developments
in international trade transactions.
2. Background
A TRS is a systematic and standard method to measure the average time taken to release cargoes and
for each step or intervention in a border procedure.4 A TRS thereby measures relevant aspects of the
effectiveness of operational procedures that are carried out by Customs and other regulatory actors in the
standard processing of imports, exports and in transit movements. It seeks to measure these elements of
trade flows with accuracy so that related decisions aimed at improving such performance can be properly
conceived and implemented.
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The third chapter on General Purpose and Scope covers different TRS methods in order to address diverse
policy objectives. It emphasises the following five key objectives for a TRS: (a) identifying bottlenecks in
the international supply chain and/or constraints affecting customs release; (b) assessing newly introduced
and modified techniques, procedures, technologies and infrastructure, or administrative changes; (c)
establishing baseline trade facilitation performance measurement; (d) identifying opportunities for
trade facilitation improvements; and (e) estimating the countrys approximate comparative position as
a benchmark tool. The rationale behind a TRS is that it should form part of a continuous improvement
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Source: Time Release Study 2007, Australian Customs Service and the WCO TRS Guide Version 2.
The objective of the TRS was to measure and monitor clearance performance with a view to
identifying opportunities for further improvement. It admitted that TRS results and follow-up analysis
have helped identify opportunities by providing a more complete view of the operating environment.16
Chapter 6, entitled Challenges and Opportunities, is the last chapter and is new. It provides examples
of challenges and opportunities encountered by WCO Members while carrying out their TRS. It
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Table 3
Table 4
Source: Kazunari Igarashi, TRS in Japan, Presentation at the CAREC Workshop by the ADB in 2010 and WCO TRS Guide
Version 2.
Appendix 2 contains model simple survey questionnaire forms by mode of transportation for those
carrying out a TRS for the first time. It also provides examples of key criteria, key interventions and
sample forms for (1) air cargoes, (2) sea cargoes released at an inland customs office, (3) sea cargoes
released at a border customs office, (4) land cargoes released at a border customs office, (5) land cargoes
released at an inland customs office, and (6) cargoes for a joint international TRS. Appendix 3 includes a
comprehensive indicative list of key questions, definitions and a sample form for a detailed TRS.
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Source: OECD, Aid for Trade Case Story19 and the WCO TRS Guide Version 2.
Although the URA had put some initiatives in place to improve the system, time measurement had not
been carried out to assess the impact of the initiatives implemented, though some estimated times were
always reported. It was pointed out that the TRS results showed a completely different processing
time from the estimated one. The URA stressed the importance of scientifically derived results.
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AU Departure
Cargo Consigned
NZ Arrival
Cargo Terminal
NZ Delivery
Transport
Cargo Delivery
Cargo Terminal
Export Declaration
NZ Import Declaration
Lodgement -6.1 days
10
11
Days
Source: Trans-Tasman Time Release Study, Australian Customs and Border Protection Service and New Zealand Customs
Service 2010, Table 16, p. 20.
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time
periods for the
Import reporting in both countries, the majority
physical
movement
of
cargoes
between
Australia
and
New
Zealand
were
very
similar
in
both
directions,
of
cargo
is
reported
and
declared
in
advance
of
Export clearance the interval between receipt
arrival
enabling
customsintothe
complete
theirof
risk
with
timetime
for includes
sea cargo from the
place
of export
country
origin to the place
at thethe
portaverage
of loadingdelivery
and departure
assessments and processing early. While the rate
anyunloading
examinationsinbythe
customs.
Thethe
timecountry
taken for of destination
of
port of
being less than nine days. It was also observed
of early declaration is slightly higher in Australia,
examinations rarely impedes cargo movement. The
proportion of export cargo selected for examination is
less than two per cent on both sides of the Tasman.
Virtually all6,cargo
out of 1
Australia is cleared immediately
Volume
Number
once it is received for export. Cargo exported from
New Zealand is cleared later because it is declared
later, however there is no evidence that this leads to
87
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Source: Google maps (satellite image), Mombasa, Coast, Kenya to Kampala, Central Region, Uganda, http://maps.google.com/
Source: Report of the Regional Pilot Time Release Study Pre-Survey Tour Mombasa-Kampala (EAC/TF/167/2011), September
2011, Directorate of Customs & Trade, EAC Secretariat.
7. Conclusions
Time release data represents a powerful performance assessment tool making it possible to measure
the effectiveness of customs services and to monitor progress. It leads to the development of a detailed
diagnostic of the time required and to the identification of potential corrective actions. Measurement
of time release is a worthwhile exercise as it can establish a pre-reform benchmark and thus help in
assessing progress made by modernisation initiatives.28 Beyond the traditional acknowledgment of the
use of a TRS within a national environment, it can also be applied to an international environment. The
new WCO TRS Guide Version 2 offers clear guidance on how to use it to assess the performance of the
international supply chain and international corridors with a view to enhancing regional cooperation,
collaboration and integration.
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Notes
1 The WCO TRS Guide Version 2 is available at: www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/
Procedures%20and%20Facilitation_2/instruments/Final%20TRS%20Guide%20Version%20II%20EN.pdf.
2 International Convention on the Simplification and Harmonization of Customs Procedures (as revised), www.wcoomd.org/
Kyoto_New/Content/content.html.
3 The WCO Data Model is a set of carefully combined data requirements that are mutually supportive and which will be updated
on a regular basis to meet the procedural and legal needs of cross-border regulatory agencies, such as Customs, controlling
export, import and transit transactions, www.wcoomd.org/home_pfoverviewboxes_tools_and_instruments_pftoolsdatamodel.
htm.
4 Shujie Zhang 2009, TRS as a measurement of trade facilitation: Customs experience in the Asia-Pacific Region, World
Customs Journal, vol. 3, no. 2, pp. 125-34, www.worldcustomsjournal.org/media/wcj/-2009/2/WCJ_V3N2_Zhang.pdf.
5 As far as the WCO is aware, the following countries have undertaken a TRS: Australia, Brunei, Cameroon, China, Indonesia,
Jamaica, Japan, Jordan, Kenya, Korea (Republic of), Lao Peoples Democratic Republic, Lesotho, Malawi, Malaysia,
Mozambique, New Zealand, Philippines, Rwanda, Serbia, Swaziland, Tanzania, Thailand, Uganda, Vietnam, Zambia.
6 Stephen Holloway 2010, Measuring the effectiveness of border management: designing KPIs for outcomes, World Customs
Journal, vol. 4, no. 2, pp. 37-54, www.worldcustomsjournal.org/media/wcj/-2010/2/Holloway.pdf.
7 Robert Ireland, Thomas Cantens and Tadashi Yasui 2011, An overview of performance measurement in customs administrations,
WCO Research Paper No. 13, www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/research/13_Performance_
Measurement_2011.pdf.
8 World Trade Organization (WTO) 2006, Communication from the European Communities, Japan, Korea, Mongolia, and
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, TN/TF/W/101, http://docsonline.wto.org/GEN_
viewerwindow.asp?http://docsonline.wto.org:80/DDFDocuments/t/tn/TF/W101.doc.
9 WTO 2011, Draft Consolidated Negotiating Text, WTO Negotiating Group on Trade Facilitation, TN/TF/W/165/Rev.11, http://
docsonline.wto.org/GEN_viewerwindow.asp?http://docsonline.wto.org:80/DDFDocuments/t/tn/TF/W165R11.doc.
10 World Customs Organization (WCO) 2011, Guide to measure the time required for the release of goods: Version 2, WCO,
Brussels.
11 The World Bank 2009, In Laos, Issue 12, July-August, http://siteresources.worldbank.org/INTLAOPRD/Resources/ 2935821202380919879/Newsletter_Issue12_English.pdf.
12 USAID, Success Story, www.satradehub.net/index.php?option=com_rsfiles&view=files&layout=view&tmpl=component&pa
th=Archive%2FSuccess+Stories%2F2007%2FSuccess+Story+TRS.pdf.
13 Nguyen Ba Hung, Regional Cooperation Specialist of the ADB, Using Time Release Studies in Trade Facilitation, Presentation
at the CAREC TRS Workshop by ADB, 2011, www.carecinstitute.org/uploads/events/2011/CAREC-Time-Release-StudyWorkshop/BIMP-EAGA-Experience-Time-Release-Studies.pdf.
14 Those are not exhaustive and based on internal research by the WCO Secretariat.
15 See Note 4.
16 Michael Carmody, CEO Australian Customs and Border Protection Service 2011, Customs in the 21st century: effective
border controls and trade facilitation, Shipping Australia, Autumn, pp. 94-7.
17 One Stop Border Post : A border post at which all traffic utilising the border post stops only once in each direction of travel and
both exit and entry procedures are undertaken from within the same control zone, The East African Community Proposed One
Stop Border Posts Bill, 2010.
18 The WCO TRS Online Software: An internet-based application for creating a database for the WCO TRS. The application has
been developed to provide Members with software to create the questionnaires that are used in conjunction with the study and
to produce reports indicating the average times and standard deviation for each step in the process of releasing goods, http://
members.wcoomd.org/trs/index.asp.
19 OECD 2011, Aid for Trade Case Stories: Global Review, www.oecd.org/dataoecd/6/53/47799918.pdf.
20 Doing Business: World Bank is a report analysing regulations that apply to an economys businesses during their life cycle,
including start-up and operations, trading across borders, paying taxes, and resolving insolvency. Although the Doing Business
analysis is comprehensive, it does not cover all aspects of the business environment such as security, macroeconomic stability,
corruption, the level of skills, or the strength of financial systems. For more details, see www.doingbusiness.org/.
21 The World Banks Logistics Performance Indicator (LPI) is an interactive benchmarking tool created to help countries identify
the challenges and opportunities they face in their trade logistics performance and what they can do to improve their performance.
The LPI is based on a worldwide survey of operators on the ground, providing feedback on the logistics friendliness of the
countries in which they operate and those with which they trade. For more details, see http://web.worldbank.org/WBSITE/
EXTERNAL/TOPICS/EXTTRANSPORT/EXTTLF/0,,contentMDK:21514122~menuPK:3875957~pagePK:210058~piPK:2
10062~theSitePK:515434,00.html.
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Shingo Matsuda
Shingo Matsuda has been working as a Technical Officer in the WCO Compliance
and Facilitation Directorate since 2009. He has been responsible for developing the
WCO Time Release Study (TRS) Guide Version 2 and has been involved in many
TRS projects worldwide, including regional (international) TRS with regional
organisations. Prior to joining the WCO, Shingo spent 17 years with Japan Customs,
working on a range of customs matters such as tariff policy and customs procedures
as well as international affairs including customs mutual administrative assistance
and Authorised Economic Operator (AEO) mutual recognition. He holds a Bachelor
of Science from Tokyo University of Marine Science and Technology.
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Abstract
Nowadays, customs services in international trade make an important contribution
to the competitiveness of global companies, and the quality of the customs services
provided can have a very real effect on companies performance. Accordingly, in this
age of the information society and virtual economy, it is essential to ensure that customs
services are provided on time and to a high standard.
1. e-Customs initiative
The concept of an electronic environment for customs (e-Customs) was announced in 20041 and
represented the culmination of a number of initiatives relating to the information society during the
1990s. These included eEurope An Information Society for All and e-Government,2 which resulted
from a report published in 1994 titled Europe and the Global Information Society3 (the Bangemann
report, Brussels, 1999).
This report presented the vision of e-commerce, which promised considerable benefits for both economic
operators and citizens. The report outlined the following strategic factors: the release of closed supply,
effect of repetition and significant reduction in the costs of conducting business activities in a modern
economy. A comparison of paper-based operations with their electronic equivalents encouraged economic
operators to look at ways of overhauling costly and inefficient business operations and provided an
indication of where the impending changes were heading. For example, the report claimed that an
electronic order service would cost one-tenth of the paper-based equivalent, whereas using electronic
services for business transactions would increase efficiency by reducing for example, fax costs by up to
95%.4 The findings in the report were quickly confirmed in practice.
In a Communication from the Commission (COM [2003] 567) dated 26 September 2003, Member States
undertook to implement the concept of e-Europeand e-Government in particular.5 This Communication
was approved by a resolution of the Commission on 5December and was referred to in the document
A Simple and Paperless Environment for Customs and Trade.6 This formed part of a series of activities
directed towards the simplification and rationalisation of regulations and customs procedures and
application of effective working methods such as information technologies, risk analysis and advanced
controls within the existing customs union.
As set out in the e-Customs Project,7 the main aims of e-Customs are as follows:
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Conclusions
It has not taken long for the EU to move towards a fully automated customs environment (e-Customs).
However, the most optimistic date for fully implementing this vision is 2015 and although a lot of
progress has been made in implementing the customs program (that is, a paperless environment for
customs administration and trade in the EU), there is still work to do on some initiatives. What is
already clear is that the introduction of an electronic customs environment will change the conditions for
international trade considerably.
Notes
1 www.sluzbacelna/projekt-programu-e-customs//, [the customs services/e-customs project] of 9July 2011.
2 According to the definition of the European Commission e-Customs is an application of IT technologies in public
administration. It is connected with the organisational changes and new abilities of public services, which aim to improve
quality of provided services by the government.
3 European Council 1999, Europe and the global information society, Bangemann report recommendations to the European
Council, Brussels, 26 May 1999, www.epractice.eu/files/media/media_694.pdf.
4 Bangemann report 1999, pp. 7-10.
5 See also, Communication from the Commission to the Council, the European Parliament and the European Economic and
Social Committee: Role of e-government for the European future, COM (2003) 567 final, of 26 September 2003.
6 Communication from the Commission to the Council, the European Parliament and the European Economic and Social
Committee of 24 April 2003, A simple and paperless environment for Customs and trade, COM (2003) 452 final, OJ C 96 of
21 April 2004, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52003PC0452:EN:HTML.
7 www.sluzbacelna/projekt-programu-e-customs//, [the customs services/e-customs project] of 9July 2011.
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Volume 6, Number 1
Ewa Gwardziska
Dr Ewa Gwardziska, is a Professors Assistant in the Business Law Department,
Warsaw School of Economics, Poland. Ewa specialises in interpreting legislation
and regulations as they relate to the services provided by customs agencies in the
implementation of customs procedures.
Volume 6, Number 1
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Abstract
Warehousekeepers are professionals who cooperate with Customs on the one hand and
importers and exporters on the other. As far as small and medium-sized enterprises
(SMEs) are concerned, the assistance and support that warehousekeepers provide
are crucial to their trade. This includes a wide range of commodity classification
and nomenclature, customs valuation, trade control measures, customs security,
logistical support and knowledge of foreign customs procedures. As far as customs
administrations are concerned, warehousekeepers can objectively explain customs
intention and opinion to SMEs and, at the same time, reflect the wishes and demands
of SMEs to Customs. In effect, therefore, warehousekeepers are bridges connecting
Customs and SMEs, thereby facilitating trade.
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102
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103
Billion USD
100
50
2005
2006
2007
2008
2009
2010
import
20.06
32.02
41.72
57.28
54.39
61.1
export
7.96
13.07
18.62
28.4
26.79
35.37
Billion USD
2000
1500
Total import volume
1000
500
0
2005
2006
2007
2008
2009
2010
100.00
50.00
0.00
-50.00
2005
2006 2007
Data source: The General Customs Administration of the Peoples Republic of China, www.customs.gov.cn/publish/portal0/.
104
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108
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5. Conclusions
Trade facilitation is an important aim that the customs authorities of many countries are working hard
to achieve. Warehousekeepers and their warehouses play a vital role in promoting the relationship
between Customs and SMEs, and are the most suitable intermediaries between Customs and SMEs.
By supporting the development of warehousekeepers, Customs can make a substantial contribution to
facilitation and effectively enforce customs law. In this respect, customs warehouses are capable of
Volume 6, Number 1
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References
Chen, Xu-dong 2010, Based on the practice of Shang Customs: research of relations of Customs and
trade facilitation, Review of Customs Law 2010, Law Press, China.
Harvie, Charles 2003, The contribution of micro-enterprises to economic recovery and poverty
alleviation in East Asia, Department of Economics, Faculty of Commerce, University of Wollongong,
http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1074&context=commwkpapers.
Lukcs, Edit 2005, The economic role of SMEs in world economy, especially in Europe, European
Integration Studies, Miskolc (Hungary), vol. 4, no. 1, pp.3-12.
World Customs Organization (WCO) 1999, International Convention on the Simplification and
Harmonization of Customs Procedures (as amended), (Revised Kyoto Convention), Guidelines to
General and Specific Annexes, WCO, Brussels.
World Customs Organization (WCO) 2005, Customs Capacity Building Diagnostic Framework, WCO,
Brussels.
Notes
1 See the announcement by Mr Li Zibing, Chairman, China Association of Small and Medium Enterprises, http://news.
xinhuanet.com/fortune/2010-05/14/c_12102294.htm. See also the announcement by Mr Zhu Hongren, General Engineer, State
Department of Industry and Information, http://finance.people.com.cn/GB/12824562.html.
2 See the study by Charles Harvie in 2003.
3 Article 3 of Chapter 1 of Guidelines to Specific Annex D, Revised Kyoto Convention.
4 Article 4.2 of Chapter 1 of Guidelines to Specific Annex D, Revised Kyoto Convention.
5 See Article 1 of Chapter 8, Revised Kyoto Convention, concerning the relationship between Customs and third parties.
6 Article 4.2, paragraph 5 of Chapter 1 of Guidelines to Specific Annex D, Revised Kyoto Convention.
7 The information was originally published on the companys website, just a few days before this article was completed; the
information is now missing. The author can only cite the information from other reliable sources. See http://app.finance.ifeng.
com/data/stock/gsjj.php?symbol=300013.
8 According to reports from Chinas General Customs Administration, when an EMBW starts its VMI service, the inward and
outward volume increases 50 times as compared with the same month the year before, www.customs.gov.cn/tabid/39267/ctl/
InfoDetail/InfoID/51196/mid/93164/Default.aspx?ContainerSrc=[G]Containers/_default/No+Container.
9 According to reports from Chinas General Customs Administration, it has permitted the establishment of customs warehouses
specifically designed for maintenance (www.customs.gov.cn/tabid/39267/ctl/InfoDetail/InfoID/184046/mid/93164/Default.
aspx?ContainerSrc=[G]Containers/_default/No+Container). Also according to reports from Chinas General Customs
Administration, a customs warehouse was established in Yiwu city, a small city in Zhejiang province of China, for display.
It facilitates the buyers and sellers to buy IRPCs and sell products (www.customs.gov.cn/tabid/39267/ctl/InfoDetail/
InfoID/188270/mid/93164/Default.aspx?ContainerSrc=[G]Containers/_default/No+Container).
10 According to the reports from Chinas General Customs Administration, such monitoring systems are installed in some customs
warehouses, www.customs.gov.cn/tabid/39267/ctl/InfoDetail/InfoID/65575/mid/93164/Default.aspx?ContainerSrc=%5bG%5
dContainers%2f_default%2fNo+Container.
11 Articles 8 and 9, Customs Rules of the Peoples Republic of China on Customs Warehouses and Goods Stored.
12 Article 14, Customs Rules of the Peoples Republic of China on Customs Warehouses and Goods Stored.
13 Article 5, Customs Rules of the Peoples Republic of China on Customs Warehouses and Goods Stored.
110
Volume 6, Number 1
Dafang Liu
Dafang Liu, an Associate Professor at Shanghai Maritime University and PhD
candidate, is currently studying Customs Law in China. Having been a customs
official at Chinas Customs Department in Shanghai for eight years and a teacher at
Shanghai Customs College for four years, Dafang has a rich experience in customs
research and practice. In 2009 he published the second edition of his textbook,
Customs Law of China. His research is now focusing on introducing measures which
facilitate trade between and among small and medium-sized enterprises as well as
the application of processes for customs guarantees and the establishment of customs
warehouses.
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Section 3
Special Report
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Border Lines
The purpose and function of borders in world history has been and remains to delineate and demarcate
that is, to differentiateone sovereignty from another. They are the juridical lines on a map, indicating
the geographical place where imperial and/or national dominion begins and ends. These shift over time as
a result of political and military developments, usually followed by legal recognition or acknowledgment
expressed in one form or another. History tells the tale of these developments and shifts. Like laws,
borders embody and reflect historys results with the narrative left out.
The spaces of borders, corresponding to their map lines, are marked by ports of entry and exit. It is
here where cross-border transactions of people and goods are processed through the exercise of
immigration and customs authorities. Typically, the scope of these border inspection authorities is most
broad regardless of the legal system under which they operate. Sovereignty asserts itself aggressively
at the border threshold to determine who and what has the right or privilege of entrance (inbound)
and exit (outbound). The levying of customs fees and duties has generated critical revenue streams for
governments since biblical times. It was no accident that one of the earliest acts of the First Congress
during the Washington Administration was to establish the U.S. Customs Service in 1789.1
Borders define a homeland. They are the primary reference points for national defense strategy and
homeland security policy. Throughout history, borders have been the site of fortification, intended
variously to shut in or keep out people or things. Chinas Great Wall in the second century BCE, Frances
Maginot Line pre-World War II, the Soviets Berlin Wall in the twentieth century, and Americas
Southwest border fence in the twenty-first century all serve to illustrate the point. It was made more poetic
and timeless by Robert Frost in Mending Wall where he wrote: Good fences make good neighbors.2
So, we see, borders are lines with real result and consequence. When we walk to the riverfront in El
Paso and wade into the Rio Grande, at midstream it becomes the Rio Bravo and Juarez, Mexico begins.
Without more, one crosses the line (la lnea) from one of the safest cities in the Western Hemisphere
(five homicides in 2010) to its most dangerous (3,400 homicides in 2010).3 Border lines matter but rarely
account by themselves for the changes they embody.
Borders as Flows
More than a generation ago, in The Structure of Scientific Revolutions, Thomas Kuhn introduced the
notion of paradigm to refer to a distinctive manner of viewing the world, a characteristic sense, that is
shaped by the larger forces at work in an era.4 This way of seeing organizes all of the data that is around
usall surrounding sensationsinto patterns that we can interpret and understand and then act on to
effect. Epochal shifts in paradigm catalyze enormous alterations in how we conduct operations and do
business at a particular point in time.5 The balance of this lecture addresses the massive paradigm change
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Conclusion
The French poet Paul Valry has observed: The [challenge of] our times is that the future is not what it
used to be.59 The themes explored here will remain the subjects of security and economic developments
over the next decades as we experience their domestic, international, and intermestic effects. Through
the lens of lines and flows, we see both an old end and the new beginning of borders.
Notes
* Assistant Secretary of International Affairs and Chief Diplomatic Officer (Former Commissioner of U.S. Customs and Border
Protection, 2010-2011), Department of Homeland Security, Washington, DC.
1 The U.S. Customs Service was established by the Fifth Act of the First Congress on July 31, 1789. About 1600-1799, U.S.
Dept of Treas., http://www.treasury.gov/about/history/Pages/1600-1799.aspx (last updated Nov. 13, 2010).
2 Robert Frost, Mending Wall, in The Poetry of Robert Frost: The Collected Poems, Complete and Unabridged 33 (Edward
Connery Lathem ed., 1969).
3 Monica Ortiz Uribe, El Paso, San Diego Among Safest Cities, KPBS.org (Nov. 22, 2010), http://www.kpbs.org/news/2010/
nov/22/el-paso-san-diego-among-safest-cities/.
4 Thomas S. Kuhn, The Structure of Scientific Revolutions 1013 (2d ed. 1962).
5 In Kuhns context these shifts marked the transition from a Ptolemaic or pretentious way of seeing the earth anchors the
universe to the materially more modest Copernican one the sun centers the solar system and so on through a mechanical
Newtonian model to the uncertainties inherent in the relativist paradigm captured by Einstein. Id. at 6691.
6 See Mark Jenkins, Tea Horse Road: The Forgotten Road, Natl Geographic Mag. (May 2010), http://ngm.nationalgeographic.
com/2010/05/tea-horse-road/jenkins-text.
7 Charles Hirschman & Elizabeth Mogford, Immigration and the American Industrial Revolution from 1880 to 1920, 38 Soc. Sci.
Res. 897 (2009).
8 On a Typical Day in Fiscal Year 2010, CPB, CBP.gov (Feb. 25, 2011), http://www.cbp.gov/xp/cgov/about/accomplish/
previous_year/fy10_stats/typical_day_fy2010.xml.
9 U.S. Customs & Border Prot., Import Trade Trends: Fiscal Year 2010 Year-End Report 18 (2010) [hereinafter Import Trade
2010 Report], available at http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/trade_trends/itt.ctt/itt.pdf.
10 Securing Americas Borders: CBP Fiscal Year 2010 in Review Fact Sheet, CBP.gov (Mar. 15, 2011), http://www.cbp.gov/xp/
cgov/newsroom/fact_sheets/cbp_overview/fy2010_factsheet.xml [hereinafter CBP 2010 in Review Fact Sheet].
11 American territory, of course, was again invaded in 1941 by Japans sneak attack at Pearl Harbor.
12 Edward Alden, Companies Take Action as Visa Curbs Hurt Trade, Fin. Times, Jan. 29, 2003 at 7; See generally Edward Alden,
The Closing of the American Border (Harper Collins Publishers 2008).
13 In addition, we have been subject to home-grown terrorist events such as that carried out at Fort Hood by Maj. Nidal
Hasan, the attack on the New York subway system planned by Najibullah Zazi and the murder of a military recruiter in
Arkansas. Robert D. McFadden, Army Doctor Held in Ft. Hood Rampage, N.Y. Times (Nov. 6, 2009), http://www.nytimes.
com/2009/11/06/us/06forthood.html?ref=nidalmalikhasan.
14 Kenneth Chang, Explosive on Flight 253 is Among Most Powerful, N.Y. Times (Dec. 7, 2009), http://www.nytimes.
com/2009/12/28/us/28explosives.html.
15 Ten Years after 9/11: Can Terrorists Still Exploit Our Visa System?: Hearing Before the H. Comm. on Homeland Sec. Subcomm.
on Border & Mar. Sec., 112th Cong. 2 (2011) (statement of Edward J. Ramotowski, Acting Assistant Secy for Visa Services,
Dept of State), available at http://homeland.house.gov/sites/homeland.house.gov/files/Testimony%20Ramotowski.pdf.
16 Mark Mazzetti & Scott Shane, Evidence Mounts for Taliban Role in Bomb Plot, N.Y. Times (May 5, 2010), http://www.nytimes.
com/2010/05/06/nyregion/06bomb.html.
17 Erika Solomon & Phil Stewart, Al Qaeda Yemen Wing Claims Parcel Plot, UPS Crash, Reuters (Nov. 5, 2010), http://www.
reuters.com/article/2010/11/05/us-usa-yemen-bomb-idUSTRE6A44PU20101105.
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of
Nationalist Expansionism
in
American History
20 History: Who Became Part of the Department?, Dept of Homeland Sec., http://www.dhs.gov/xabout/history/editorial_0133.
shtm (last visited Feb. 26, 2012).
21 See The Future is Now, U.S. Customs Today (Feb. 2003), http://www.cbp.gov/xp/CustomsToday/2003/February/future.xml.
22 John Barth, The End of the Road 76 (rev. ed. 1967) (emphasis omitted).
23 CBP also serves as the single executive agent for forty other federal agencies charged with administrative or regulatory
duties regarding incoming and outgoing people and things. These include, notably, the Food and Drug Administration, the
Environmental Protection Agency, the Consumer Products Safety Commission, and the Department of Transportation.
24 Canada, the United Kingdom, and Australia are among a handful of countries which have taken steps, large and small, toward
unification. Each, however, has stopped short of a full merger of responsibilities. The Canadian Border Services Agency
(CBSA), for example, regulates the ports of entry while the Royal Canadian Mounted Police (RCMP), separately governed,
acts between the ports of entry and elsewhere through the interior of the country. The Australian Customs and Border Protection
Services (ACBP) shares border-related responsibilities with the Department of Immigration and Citizenship (DIAC). The
United Kingdom Border Agency (UKBA), authorized to enforce immigration laws and collect customs duties, is not charged
with counter-terrorist responsibilities.
25 The Harper Book of Quotations 451 (Robert I. Fitzhenry ed., 3d ed. 1993) (quoting Arthur Schopenhauer) [hereinafter Harper
Book of Quotations].
26 Homeland Security Act of 2002, Pub. L. No. 107-296, 116 Stat. 2135.
27 About the Department of Defense (DOD), U.S. Dept
[hereinafter About the DOD].
of
28 About, Dept of Homeland Sec., http://www.dhs.gov/xabout/ (last updated Feb. 13, 2012).
29 The Executive Branch, White House, http://www.whitehouse.gov/our-government/executive-branch (last visited Feb. 26,
2012).
30 About the DOD, supra note.
31 The Coast Guard became part of the Department of Homeland Security in 2003. Coast Guard History: When Was the Coast
Guard Established?, U.S. Coast Guard, http://www.uscg.mil/history/faqs/when.asp (last modified Jan. 31, 2012).
32 Goldwater-Nichols Department of Defense Reorganization Act of 1986, Pub. L. No. 99-433, 100 Stat. 992 (codified at 10
U.S.C. 101 et seq. (2006)).
33 Bruce Berkowitz, Intelligence Reform: Less Is More, Hoover Digest (Apr. 30, 2004), http://www.hoover.org/publications/
hoover-digest/article/6809.
34 Peter Baker, Helene Cooper & Mark Mazzetti, Bin Laden is Dead, Obama Says, N.Y. Times (May 1, 2011), http://www.
nytimes.com/2011/05/02/world/asia/osama-bin-laden-is-killed.html?_r=1&hp.
35 See Civilian, Military Trials Prosecute Terrorism Suspects Differently, USA TODAY (Nov. 22, 2009, 11:58 PM), http://www.
usatoday.com/news/washington/2009-11-22-civilian-vs-military-trials_N.htm.
36 See Nathan Canestaro, Homeland Defense: Another Nail in the Coffin for Posse Comitatus, 12 Wash. U. J.L. & Poly 99,
99144 (2003).
37 Import Trade 2010 Report, supra note 9, at 18.
38 See Lawrence Wright, The Looming Tower: Al-Qaeda and the Road to 9/11 (2006).
39 Two notable cases involve the arrest and conviction of U.S. lawful permanent resident Najibullah Zazi and U.S. born citizen
David Coleman Headley, formerly known as Daood Sayed Gilani. See United States v. Zazi, No. 09-CR-663, 2010 WL
2710605 (E.D.N.Y. June 30, 2010); United States v. Kashmiri, No. 09 CR 830-4, 2011 WL 1326373, at *15 (N.D. Ill. Apr. 1,
2011). Zazi was recruited by al Qaida to conduct suicide attacks using explosives against the New York City subway system.
See Zazi, 2010 WL 2710605, at *1. Headley helped plan the November 2008 attacks in Mumbai in concert with al Qaida
and Pakistan-based terrorist organization Lashkar-e-Taiba. See Kashmiri, 2011 WL 1326373, at *12; Sebastian Rotella The
American Behind Indias 9/11And How U.S. Botched Chances to Stop Him, Pro Publica (November 22, 2011, 10:52 AM),
http://www.propublica.org/article/david-headley-homegrown-terrorist.
40 Budget Hearing Before the H. Appropriations Comm., Subcomm. on Homeland Sec., 112th Cong. 18187 (2011)
(testimony of Commr Alan Bersin, U.S. Customs & Border Prot.), available at http://www.dhs.gov/ynews/testimony/
testimony_1300738129469.shtm.
41 Id.
42 See Trusted Traveler Programs, U.S. Customs & Border Prot., http://www.cbp.gov/xp/cgov/travel/trusted_traveler/ (last
visited Feb. 26, 2012).
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Section 4
Reference
Material
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EDITORIAL BOARD
Professor David Widdowson
University of Canberra, Australia Editor-in-Chief
Professor David Widdowson is Chief Executive Officer of the Centre for Customs
& Excise Studies at the University of Canberra. He is President of the International
Network of Customs Universities; a member of the WCOs PICARD Advisory Group,
and a founding director of the Trusted Trade Alliance. David holds a PhD in Customs
Management, and has over 30 years experience in his field of expertise, including 21
years with the Australian Customs Service. His research areas include trade facilitation,
regulatory compliance management, risk management and supply chain security.
Dr Andrew Grainger
The University of Nottingham, UK
Dr Andrew Grainger is an experienced trade facilitation practitioner and academic. He is
currently based at Nottingham University Business School and is regularly consulted by
governments, companies and international organisations. In previous roles, Andrew worked
as Deputy Director at SITPRO, the former UK trade facilitation agency, and Secretary for
EUROPRO, the umbrella body for European trade facilitation organisations. His PhD thesis
on Supply Chain Management and Trade Facilitation was awarded the Palgrave Macmillan
Prize in Maritime Economics and Logistics 2005-2008 for best PhD thesis.
Dr Juha Hintsa
Cross-border Research Association and Hautes Etudes Commerciales (HEC), University
of Lausanne, Switzerland
Dr Juha Hintsa is a Senior Researcher in global supply chain security management.
He is one of the founding partners of the Global Customs Research Network, and the
founder of the Cross-border Research Association (CBRA) in Lausanne, where he
undertakes research into various aspects of supply chain security management in close
collaboration with several multinational corporations. Juhas PhD thesis was on Post2001 supply chain security: impacts on the private sector.
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Sub-editors
Elaine Eccleston
University of Canberra, Australia
Elaine Eccleston, BA, MA, developed the Information and Knowledge Management
subjects taught at the University of Canberra. She was Manager, Information and Knowledge
Management at the Australian Trade Commission, and has worked in these fields for the
Australian Taxation Office, the Department of Foreign Affairs & Trade, and as Manager,
Information & Records Management, BP Oil UK. She is Editor, at the Centre for Customs &
Excise Studies, University of Canberra.
Dr Christopher Dallimore
Dr Christopher Dallimore studied Law and German at the University of Wales, Cardiff
and obtained a Magister Legum at Trier University, Germany. His doctoral thesis was
on the legal implications of supply chain security. For a number of years, Chris was
Course Co-ordinator of the Master of Customs Administration postgraduate program
at Mnster University, Germany, and currently works for the Trusted Trade Alliance
Europe GmbH. He is a lecturer at Mnster University and translator of a number of
legal texts.
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